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The Forex Regime and EMU Expansion

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  • Pieter van Foreest
  • Casper de Vries

Abstract

This paper provides evidence that the choice of the foreign exchange regime is not of first order importance for achieving high output growth. It is argued that due to the forward looking nature of the foreign exchange market, exchange rate stability hinges on the current and anticipated coherency of monetary and fiscal policies. We demonstrate this empirically on a panel including potential EMU accession countries. By means of rank regression analysis we uncover the partial links across the regime specifics of the representative country versus the German regime during the 1990s. Copyright Kluwer Academic Publishers 2003

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  • Pieter van Foreest & Casper de Vries, 2003. "The Forex Regime and EMU Expansion," Open Economies Review, Springer, vol. 14(3), pages 285-298, July.
    • Handle: RePEc:kap:openec:v:14:y:2003:i:3:p:285-298
    DOI: 10.1023/A:1023987104441
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    2. Leonardo Becchetti & Iftekhar Hasan, 2005. "The Effects of (within and with EU) Regional Integration: Impact on Real Effective Exchange Rate Volatility, Institutional Quality and Growth for MENA Countries," WIDER Working Paper Series RP2005-73, World Institute for Development Economic Research (UNU-WIDER).
    3. Christian Fahrholz, 2003. "Strategic Exchange-Rate Policy of Accession Countries in ERM II," Eastward Enlargement of the Euro-zone Working Papers wp14, Free University Berlin, Jean Monnet Centre of Excellence, revised 01 Apr 2003.
    4. Bagella, Michele & Becchetti, Leonardo & Hasan, Iftekhar, 2006. "Real effective exchange rate volatility and growth: A framework to measure advantages of flexibility vs. costs of volatility," Journal of Banking & Finance, Elsevier, vol. 30(4), pages 1149-1169, April.
    5. Ahsan Abbas & Eatzaz Ahmed & Fazal Husain, 2019. "Political and Economic Uncertainty and Investment Behaviour in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 58(3), pages 307-331.

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