In this paper we show that inflation differentials among the countries in the European Monetary Union (EMU) are an economically significant risk to German firms, which make up the largest economy in the EMU. This risk can be interpreted as real "exchange rate exposure" resulting from trade...

In this paper we show that inflation differentials among the countries in the European Monetary Union (EMU) are an economically significant risk to German firms, which make up the largest economy in the EMU. This risk can be interpreted as real “exchange rate exposure” resulting from trade...

The impact of EMU on the transatlantic exchange rate stability raises the more general question of whether the exchange rate is a useful adjustment instrument or source of instability. We estimate a simple, three-country model for the United States, Germany and France, over the 1972-1995 period....

We analyze the performance of Bayesian model averaged exchange rate forecasts for euro/US dollar, euro/Japanese yen, euro/Swiss franc and euro/ British pound rates using weights based on the out-of-sample predictive likelihood. The paper also presents a simple stratified sampling procedure in...

We apply BEER and PEER approaches to calculate real equilibrium exchange rates for five EU accession countries in central and east Europe. Bilateral nominal equilibrium exchange rates against the euro are obtained through algebraic transformation of the results. Panel cointegration techniques...

This paper presents a small-open-economy model calibrated to Irish data. The model can be used for many purposes. It is applied here to the EMU debate. It comes close to replicating the employment effects of sterling weakness reported in the recent ESRI study. When the assumptions on wage...

This paper attempts to measure the degree of misalignment of the euro - in particular against the dollar - by estimating equilibrium exchange rates for the euro and the rest of G-7 currencies. Building on the methodology of Alberola et al. (1999), we show that the stock of net foreign assets and...