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Volume 55, Issue 5 -6

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Real Exchange Rates and Optimum Currency Areas: Evidence from Developed Economies (in English)

Horváth, Roman; Kučerová, Zuzana

Year: 2005   Volume: 55   Issue: 5 -6   Pages: 253-266

Abstract: In this paper, the authors link real exchange rates and optimum currency area criteria. The authors examine the hypothesis that countries not fulfilling optimum currency area criteria in full will tend to have volatile bilateral real exchange rate. The authors find that, based on a study of data from developed economies from the 1990s, optimum currency criteria (such as trade integration, asymmetry of shocks, openness) help explain bilateral real exchange-rate variation.

JEL classification: E58, E52, F42, F33

Keywords: GMM estimation; optimum currency areas; real exchange Mates

DOI:

RePEc: http://ideas.repec.org/a/fau/fauart/v55y2005i5-6p253-266.html

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