Exchange Rate Regimes and Shocks Asymmetry: The Case of the Accession Countries

Posted: 19 Oct 2004

See all articles by Jan Babetski

Jan Babetski

Center For Econ Research & Grad Education, and Econ Institute, Prague (CERGE-EI); National Center for Scientific Research (CNRS) - Research Center On Transition Economics (ROSES)

Laurence Boone

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO)

Mathilde Maurel

Université Paris I Panthéon-Sorbonne - Centre Maison des Sciences Economiques

Abstract

This paper reviews the pros and cons of an early EU enlargement that includes the Central and Eastern European countries (CEECs). The analysis of Maastricht criteria and real convergence enables us to distinguish the subset of transition countries that have succeeded in stabilizing and restoring economic growth from a second subset that failed to do so. For the former group, business cycles symmetry is an important issue. Using the Kalman filter, we compute the time varying correlation of demand and supply shocks in Ireland, Portugal, Spain and eight CEECs, namely the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia. Our results emphasize an ongoing process of convergence of demand shocks, but divergence of supply shocks.

Keywords: EU enlargement, exchange rate regimes, OCA (optimal currency area) criteria, Kalman filter

JEL Classification: E32, F30, F42

Suggested Citation

Babeckij (Babetski), Jan (Ian) and Boone, Laurence and Maurel, Mathilde, Exchange Rate Regimes and Shocks Asymmetry: The Case of the Accession Countries. Available at SSRN: https://ssrn.com/abstract=606186

Jan (Ian) Babeckij (Babetski) (Contact Author)

Center For Econ Research & Grad Education, and Econ Institute, Prague (CERGE-EI) ( email )

Politickych veznu 7
Prague, 111 21
Czech Republic

HOME PAGE: http://www.cerge-ei.cz

National Center for Scientific Research (CNRS) - Research Center On Transition Economics (ROSES)

3, rue Michel-Ange
Paris cedex 16, 75794
France
+33 1 4407 8194 (Phone)
+33 1 4407 8191 (Fax)

Laurence Boone

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) ( email )

2 rue Andre Pascal
Paris Cedex 16, MO 63108
France
+33 1 4524 1473 (Phone)
+33 1 4524 9050 (Fax)

Mathilde Maurel

Université Paris I Panthéon-Sorbonne - Centre Maison des Sciences Economiques ( email )

106/112 boulevard de l'Hopital
Paris Cedex 13, 75647
France

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