The authors study the dependence of the Czech koruna’s exchange rate to the euro on risk factors that cannot be reduced to standard macroeconomic fundamentals. For this purpose, they construct an international asset-pricing model in which the exchange rate is codetermined by a risk factor...

This article reviews several approaches to testing the effectiveness of foreign-exchange interventions and applies some of these to data on interventions made by the Czech National Bank in 2001 and 2002. The reaction function of the CNB and the impact of interventions on exchange rates and on...

The strong appreciation of the Czech koruna over 2001?2002 and the foreign exchange interventions conducted by the Czech central bank under its inflation-targeting regime provide a good opportunity to consider the pros and cons of FX intervention, an often-controversial monetary-policy...

A hypothesis is examined in support of Jin and Myers (2006) using cross-country individual stock’s R2 (i.e., individual stock’s R2 are calculated from the market-model regression using each country’s market return and U.S. market returns). Consistent with Jin and Myers, R2 has consistently...

The authors address the issue of foreign exchange risk and its macroeconomic determinants in several Central European (CE) economies. The joint distribution of excess returns in the foreign exchange market and observable country-specific macroeconomic factors is modeled using the stochastic...

This study examines monetary policy efficiency in Central Asia by investigating the monetary transmission mechanism in the region’s economies. To examine monetary policy efficiency, it is necessary to take into account factors that might impede the transmission, such as high levels of...

The article summarizes recognized empirical knowledge about the causes of currency crises, making use of several extensive empirical studies carried out in the late 1990s, and examines select theoretical models of such causation. The results are divided into three levels of causes: general risk...

The aim of this paper is to challenge the widely made claim that a weaker currency will automatically improve the current-account balance. Its objective is to present the puzzling fact that, for an open economy, a current-account reaction to nominal exchange rate changes cannot be identified....

In East Germany, political considerations and ample funding precipitated a fast income convergence with the West in the early 1990s. However, the ensuing deterioration of competitiveness has led to a standstill in real convergence since the middle of the past decade. By contrast, Central Europe...

Using panel data for selected national economies, we estimate relative price changes stemming from fluctuations in sectoral productivity. Subsequently, we calculate the cross-country CPI-inflation differentials implied by sectorally unbalanced productivity growth, taking into account...