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Adjustment mechanisms and exchange rate regimes in 2004 new EU members during the financial crisis

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  • Kosta Josifidis
  • Jean-Pierre Allegret
  • Emilija Beker Pucar

Abstract

The global economic crisis confronted emerging European countries with abrupt external shocks, while adjustment mechanisms differed according to exchange rate regimes. ‘Fixers’ were forced to accept internal devaluation, while ‘floaters’ used the exchange rate as a shock absorber. Empirical research is based on six emerging European countries in January 2004--December 2010 and the January 2008--December 2010 crisis period. This article explores the real exchange rate as an adjustment mechanism variable, crisis transmission to the real economy, and foreign exchange intervention as a way of exchange rate management/defence. The relations investigated are observed using VAR models in order to distinguish between the groups of ‘floaters’ and ‘fixers’.

Suggested Citation

  • Kosta Josifidis & Jean-Pierre Allegret & Emilija Beker Pucar, 2013. "Adjustment mechanisms and exchange rate regimes in 2004 new EU members during the financial crisis," Post-Communist Economies, Taylor & Francis Journals, vol. 25(1), pages 1-17, March.
    • Handle: RePEc:taf:pocoec:v:25:y:2013:i:1:p:1-17
    DOI: 10.1080/14631377.2013.756614
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    Cited by:

    1. Jean Pierre Allegret, 2012. "Responses of Monetary Authorities in Emerging Economies to International Financial Crises: What Do We Really know?," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 3-32.
    2. Jean-Pierre Allegret & Audrey Sallenave, 2015. "Capital flow bonanzas and monetary policy in emerging Europe: responses to the global financial crisis," Post-Communist Economies, Taylor & Francis Journals, vol. 27(4), pages 429-447, December.
    3. Jean-Pierre Allegret, 2014. "The effects of the global crisis on emerging economies," Post-Print hal-01410759, HAL.
    4. Josifidis, Kosta & Allegret, Jean-Pierre & Gimet, Céline & Pucar, Emilija Beker, 2014. "Macroeconomic policy responses to financial crises in emerging European economies," Economic Modelling, Elsevier, vol. 36(C), pages 577-591.
    5. Jean-Louis Combes & Alexandru Minea & Lavinia Mustea & Thierry Yogo, 2016. "Output effects of fiscal stimulus in Central and Eastern European countries," Post-Communist Economies, Taylor & Francis Journals, vol. 28(1), pages 108-127, January.
    6. Manuel BENAZIC & Ines KERSAN-SKABIC, 2016. "The determinants of exchange rate in Croatia," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 7, pages 125-150, June.

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