| Description |
1 online resource (31 pages) : illustrations |
| Series |
IMF working paper, 2227-8885 ; WP/04/35 |
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IMF working paper ; WP/04/35.
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| Contents |
""Contents""; ""I. INTRODUCTION""; ""II. A MODEL OF SHORT-TERM EXCHANGE RATE DETERMINATION""; ""III. STYLIZED FACTS ABOUT FOREIGN EXCHANGE MARKETS""; ""IV. RESULTS""; ""V. CONCLUDING REMARKS""; ""References"" |
| Summary |
The paper looks at the hypothesis that financial market liberalization can create a basis for more stable exchange rates, as deviations of exchange rates from equilibrium levels bring forth stabilizing flows of liquidity. This "endogenous liquidity" hypothesis suggests that opening financial markets militates in favor of exchange rate flexibility by increasing the viability of a floating regime, as well as making it more difficult to maintain a peg. The paper examines this hypothesis in a sample of four transition economies and finds that exchange rates tend to return faster to their Hodrick-Prescott-based values where markets are liberalized. The results suggest that early and successful foreign exchange liberalization pays off in terms of depth of the market and, hence, faster adjustment of exchange rate to shocks. Moreover, it implies that central banks should not be overly concerned with short-run volatility of their national exchange rates, given the self-correcting tendencies |
| Bibliography |
"February 2004." |
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Includes bibliographical references (pages 30-31) |
| Notes |
Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002. http://purl.oclc.org/DLF/benchrepro0212 MiAaHDL |
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digitized 2010 HathiTrust Digital Library committed to preserve pda MiAaHDL |
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Print version record |
| Subject |
Foreign exchange rates -- Poland
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Foreign exchange rates -- Hungary
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Foreign exchange rates -- Slovakia
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Foreign exchange rates -- Czech Republic
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Free trade -- Hungary
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Free trade -- Poland
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Free trade -- Czech Republic
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Free trade -- Slovakia
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Commercial policy
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Foreign exchange rates
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Free trade
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| SUBJECT |
Poland -- Commercial policy
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Czech Republic -- Commercial policy
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Slovakia -- Commercial policy
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Hungary -- Commercial policy
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| Subject |
Czech Republic
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Hungary
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Poland
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Slovakia
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| Form |
Electronic book
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| Author |
International Monetary Fund. Policy Development and Review Department, issuing body.
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| ISBN |
1451892888 |
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9781451892888 |
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1281271543 |
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9781281271549 |
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9781451845389 |
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1451845383 |
| ISSN |
2227-8885 |
|
