The Euro as a Monetary Anchor in the CEECs |
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Authors: | Bénassy-Quéré Agnès Lahrèche-Révil Amina |
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Institution: | (1) University of Lille 2 and CEPII, 9 rue Georges Pitard, 75015 Paris, France;(2) University of Amiens and CEPII, France |
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Abstract: | We study whether Central and Eastern European Countries (CEECs) have an incentive to use the euro as a monetary anchor. Adapting a cross-section estimation method initiated by Bayoumi and Eichengreen, we show that, compared to an optimum currency area standard, the CEECs have paid too much attention to the USD in the past and should prefer the euro to the dollar as a nominal anchor. Through a theoretical model that takes external constraints into account, we then show that the CEECs should also have an incentive to stabilize their currencies in real terms against a basket where the euro would be prominent. |
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Keywords: | currency pegs currency baskets euro Central and Eastern European Countries |
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