Macroeconomic convergence is critical for member states to achieve the level of harmonization required for establishing a stable and resilient monetary union. The East African Community (EAC) member states, therefore, established set targets for macroeconomic convergence, intending to eliminate...

Can fixed exchange rate regimes cause output divergence among member states? We show that such divergence is a long-run equilibrium characteristic of a two-region model with fixed exchange rates, heterogeneous labor markets, and endogenous growth. Under flexible exchange rates, monetary policy...

We analyze the effectiveness of the foreign exchange market interventions conducted by the European Central Bank (ECB) in the fall of 2000 to support the external stability of the euro. To this end, in a first step different channels through which interventions may influence exchange rate...

This paper assesses exchange rate development and volatility in six new EU member states (Cyprus, Czech Republic, Hungary, Poland, Slovakia, and Slovenia) during the period November 1996 - April 2006. The study is motivated by the unavoidable participation of the new member states' currencies in...

We present a model of a quot;softquot; exchange rate target zone and interpret it as a stylized description of the post-August 1993 ERM. Our central bank targets a moving average of the current and past exchange rates, rather than the exchange rate's current level, thus allowing the rate to move...

From the onset of the euro crisis to the Brexit vote, we have witnessed impressive reductions of current account imbalances in peripheral countries of the euro area. These reductions can be the result of either a compression of internal demand or an improvement in external competitiveness. In...

In this study the relationship between change in US Dollar-Euro exchange rate and short-term market rates (Federal Funds Rate, Three-Month Treasury Bill and Three-Month LIBOR) is examined. The study finds that there is a strong relationship among the US Dollar-Euro exchange rates, federal funds...

In this paper we claim that the empirical literature on target zones which is usuallay interpreted as having overwhelmingly tested and falsified Krugman's model is really a test of ERM asymmetry. Its massive empirical rejection thus means that the ERM never operated as a fully symmetrical system