Recent literature on the European debt crisis emphasizes that rising external trade and lending imbalances between the European Monetary Union's (EMU) Northern and Southern member states served as a crucial determinant behind speculative divergence between these two regions. However, these...

The main target of this paper is to analyze two problems: namely, whether the Polish exchange rate system is adjusted to the rules of ERM II and whether an exchange rate system that has been used in Poland since April 2000 constitutes appropriate foundation for the evaluation of the zloty/euro...

This paper addresses the puzzle of regime-dependent volatility in foreign exchange. We extend the literature in two ways. First, our microstructural model provides a qualitatively new explanation for the puzzle. Second, we test implications of our model using Europe's recent shift to rigidly...