Determinants of the exchange market pressure in the euro-candidate countries

MPRA Paper from University Library of Munich, Germany

Abstract: In the paper we choose the correct model specification for eight new EU Member States (NMS) to estimate the exchange market pressure (EMP) over the period 1995-2009. The results suggest that growth of domestic credit and money multiplier had a significantly positive impact on EMP. Furthermore, EMP in many NMS was determined by foreign disturbances, namely euro area’s money supply, foreign capital inflow and interest rate differential. EMP in most of NMS with flexible exchange rate regime was primarily absorbed by changes in international reserves. This forms, along with fundamentally stable EMP development in recent years, a solid basis for potential fulfilment of the exchange rate stability convergence criterion.

Keywords: exchange market pressure; Girton-Roper model; determinants; new EU Member States (search for similar items in EconPapers)
JEL-codes: C32 F31 F36 (search for similar items in EconPapers)
Date: 2010-11-22
New Economics Papers: this item is included in nep-eec, nep-mon and nep-tra
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:26933

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