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Exchange Rate Management Strategies in the Accession Countries: The Case of Hungary

Author

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  • Garett Jones

    (Department of Economics and Finance, Southern Illinois University Edwardsville, Edwardsville, IL 62026, USA.)

  • Ali M Kutan

    ([1] Department of Economics and Finance, Southern Illinois University Edwardsville, Edwardsville, IL 62026, USA. [2] Center for European Integration Studies (ZEI), Bonn, Germany)

Abstract

Several leading candidate countries will eventually enter the European Monetary Union (EMU). A key question is what exchange rate management policy should be pursued after joining the European Union (EU). This paper focuses on the impact of Euro-area monetary policy on Hungary. We find that Euro-area monetary policy shocks may be destabilising for Hungary as the impact of these shocks appears to be much greater on Hungarian industrial production than on Euro-area industrial production. Thus, Hungary has much to gain by retaining some monetary policy independence during the interim period between admission to the EU and adoption of the euro in order to isolate itself from Euro-area monetary policy shocks. Comparative Economic Studies (2004) 46, 23–44. doi:10.1057/palgrave.ces.8100044

Suggested Citation

  • Garett Jones & Ali M Kutan, 2004. "Exchange Rate Management Strategies in the Accession Countries: The Case of Hungary," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 46(1), pages 23-44, March.
    • Handle: RePEc:pal:compes:v:46:y:2004:i:1:p:23-44
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    Citations

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    Cited by:

    1. repec:spo:wpmain:info:hdl:2441/3262 is not listed on IDEAS
    2. repec:hal:spmain:info:hdl:2441/3262 is not listed on IDEAS
    3. Jesús Rodríguez López & José Luis Torres Chacón, 2007. "Following the Yellow Brick Road to the Euro?: Czech Republic, Hungary, and Poland," Eastern European Economics, Taylor & Francis Journals, vol. 45(6), pages 46-79, November.
    4. Orlowski, Lucjan T., 2004. "Exchange rate risk and convergence to the Euro," ZEI Working Papers B 25-2004, University of Bonn, ZEI - Center for European Integration Studies.
    5. Jérôme Creel & Sandrine Levasseur, 2006. "Canaux de transmission de la politique monétaire dans l'UE," SciencePo Working papers Main hal-03471868, HAL.
    6. Mikek, Peter, 2008. "Alternative monetary policies and fiscal regime in new EU members," Economic Systems, Elsevier, vol. 32(4), pages 335-353, December.
    7. Sahar Bahmani & Ali Kutan, 2010. "How stable is the demand for money in emerging economies?," Applied Economics, Taylor & Francis Journals, vol. 42(26), pages 3307-3318.
    8. Crespo Cuaresma, Jesus & Wojcik, Cezary, 2006. "Measuring monetary independence: Evidence from a group of new EU member countries," Journal of Comparative Economics, Elsevier, vol. 34(1), pages 24-43, March.
    9. Jérôme Creel & Sandrine Levasseur, 2006. "Canaux de transmission de la politique monétaire dans l'ue. Le cas de trois nouveaux entrants," Revue économique, Presses de Sciences-Po, vol. 57(4), pages 881-898.
    10. Mohsen Bahmani-Oskooee & Ali M. Kutan & Dan Xi, 2013. "The impact of economic and monetary uncertainty on the demand for money in emerging economies," Applied Economics, Taylor & Francis Journals, vol. 45(23), pages 3278-3287, August.
    11. Slavov, Slavi T., 2008. "Measuring and modeling the effects of G-3 exchange rate fluctuations on small open economies: A natural experiment," Economic Systems, Elsevier, vol. 32(3), pages 253-273, September.

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