Czech economy has recently accelerated the real economic convergence to the European average. Nevertheless, in terms of price convergence the Czech economy is still lagging behind the expected dynamics, which should theoretically respond to the pace of relative economic growth. This asymmetry...

The paper discusses the phenomenon of long-term real equilibrium appreciation of the koruna in the context of economic, i.e. nominal and real convergence. The real appreciation can take place either through a nominal exchange rate channel or through inflation differential channel vis-á-vis the...

A number of authors have used the concept of an optimum currency area (or OCA) index to assess the relative proximity of various pairs of economies to the ideal of an optimum currency area. Alas, a significant deficiency of this approach as used so far is that it provides no room for long-term...

The paper deals with accumulation of foreign exchange reserves of central banks and its consequences in banking system liquidity management. In theoretical part the case of banking system liquidity surplus is analyzed focusing on creation of liquidity through FX operations, sterilization of...

This paper is focused on the historical development of selected exchange rates' volatility, that is: AUD, CAD, DEM, DKK, EUR, FRF, GBP, JPY, SEK and CHF against USD. The paper aims to show that relatively large increment of exchange markets' volatility is nothing special in the historical...

International monetary system made by agreement in Bretton – Woods, is widely known to be the system of fixed exchange rates with allowed +/- 1% band of oscillation. As such, it is viewed as the period of exchange rates stability. However, our analysis of Reinhart – Rogoff’s (2004)...

The paper presents both theoretical and an empirical analysis of factors influencing the prices of non-tradable goods and services in the Czech economy. The analysis discusses the development of the real exchange rate of the Czech koruna and quantifies the size of the real exchange rate...

In this essay I've demonstrated that there is evidence of unstable and non-linear relationship between fundamental variables and exchange rates. I have tried to "tune" Frankel's (1979) real interest differential model of exchange rate fluctuation. I have distinguished between Czech crown/Euro...

The large financial crises in the last decade have increased the interest of many economists in searching for some indicators, which can predict speculative attacks on currencies. Most of these studies concern on emerging economies, because they are more vulnerable to such speculative attacks....

The paper presents a dynamic approach to the theory of uncovered interest rate parity. It is examined the dynamic relation between the actual change in spot exchange rate and interest rate differential. Authors show the hypothesis of uncovered interest rate parity is based on an ex ante view and...