Fixing the exchange rate stabilises inflation and reduces monetary seignoriage, a key source of financing under the fiscal dominance hypothesis. However, the link between fixed exchange rate regimes and fiscal discipline in emerging markets has been found to be weak. This paper thoroughly...

This paper analyzes disparities among nominal and real exchange rate movements across the Central and Eastern European (CEE) countries from 1991 to 1996. The method of analyzing such processes is to examine whether the differentials of exchange rate changes converge or diverge over time....