This paper examines the relevance of the Balassa-Samuelson productivity-bias hypothesis for explaining long-run permanent shocks in the real exchange rates. The sample consists of yearly data on real exchange rates and productivity for six OECD countries. On the basis of Johansens maximum...

This paper examines the long-run and short- run effects of depreciation/ devaluation for major European Union countries (Germany, France, the Unit - ed Kingdom, and Italy) over the 1975-1997 period. The approach is based on cointegration techniques proposed by Johansen [1988] and uses quarterly...

This paper examines the monetary model of exchange rate determination for the US dollar exchange rates against the currencies of Canada, Japan, and the United Kingdom. In this paper, we utilize the cointegration technique for testing long-run relationship, and vector error correction model for...

The signalling channel suggests that central banks use sterilized interven - tions in the foreign exchange market to convey information about future mone - tary policy to the market. To date, this theory is not sufficiently supported by theoretical work that establishes the link between...

A classic argument in favor of a fixed exchange rate regime (ERR) has been the promotion of international trade between the pegging country and its base country. Results from previous literature point to a significant and highly positive effect of adopting a fixed ERR on bilateral trade between...

This paper examines the hypothesis of Purchasing Power Parity (PPP), i.e. the proposition that the equilibrium real exchange rate is a constant in the long run, in the case of Europe of the 15. For that purpose, we study the statistical properties of 14 European bilateral real exchange rates...

This paper examines synchronization in the euro area and the role of intra-EMU trade from 1981 to 2011, focusing in particular on southern European countries. The results indicate that the intensification of synchronisation that occurred in the nineties across almost all countries could...

The aim of this paper is to investigate whether price dynamics is homogeneous across the Eurozone countries. Relying on monthly data over the January 1970~July 2011 period, we test for the absolute purchasing power parity (PPP) hypothesis through the implementation of second and third-generation...

Following the 2008 financial crisis, the world’s attention was drawn to the periphery of the European Union, where economic openness and pegs to the Euro combined to destabilize the region. This study measures the output volatility of a set of Central and Eastern European countries from the...

We recommend a Bretton Woods system along structural lines. A key component of the case is the substitution of the money transmission mechanism by the credit transmission mechanism. We suggest that the real exchange rate be the variable of cooperation between countries that are free to set...