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Exchange Market Pressure Before Entering The Erm Ii: The Case Of Central European Countries

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  • Daniel Stavárek

    (Silesian University in Opava School of Business Administration in Karviná, Department of Finance)

Abstract

This paper estimates the exchange market pressure in four Central European countries which are also new member of the European Union - Czech Republic, Hungary, Poland and Slovenia. As all new EU-member countries are supposed to join the European Economic and Monetary Union soon, they must pay attention on fulfilling of all convergence criteria. One of the criterions deals with exchange rate stability and is associated with membership in the Exchange Rate Mechanism II. Estimation and analysis of exchange market pressure are extremely important since almost all new EUmembers will be forced to switch their relatively flexible exchange rate regime to the ERM II which is considered as quasifixed. This paper reveals a significance of exchange market pressure in all types of exchange regime arrangement in all countries analyzed. The paper concludes that exchange market pressure achieved the highest level in fixed pegs regimes and the volatility of exchange market pressure was lowest in the floating regimes.

Suggested Citation

  • Daniel Stavárek, 2006. "Exchange Market Pressure Before Entering The Erm Ii: The Case Of Central European Countries," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 8(19), pages 34-39, February.
    • Handle: RePEc:aes:amfeco:v:8:y:2006:i:19:p:34-39
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    References listed on IDEAS

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    1. VANNESTE, Jacques & VAN POECK, André & VEINER, Maret, "undated". "Exchange rate regimes and exchange market pressure in accession countries," Working Papers 2004012, University of Antwerp, Faculty of Business and Economics.
    2. Weymark, Diana N., 1995. "Estimating exchange market pressure and the degree of exchange market intervention for Canada," Journal of International Economics, Elsevier, vol. 39(3-4), pages 273-295, November.
    3. Pentecost, Eric J. & Van Hooydonk, Charlotte & Van Poeck, Andre, 2001. "Measuring and estimating exchange market pressure in the EU," Journal of International Money and Finance, Elsevier, vol. 20(3), pages 401-418, June.
    4. Girton, Lance & Roper, Don, 1977. "A Monetary Model of Exchange Market Pressure Applied to the Postwar Canadian Experience," American Economic Review, American Economic Association, vol. 67(4), pages 537-548, September.
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    Cited by:

    1. Stavarek, Daniel, 2010. "Exchange Market Pressure and De Facto Exchange Rate Regime in the Euro-Candidates," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 119-139, July.

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