Over- or Undervalued Euroland Entry? Jens Hölscher University of Brighton Mariusz Jarmużek CASE Foundation.

Slides:

Advertisements

Similar presentations

Economics and Business Exchange Supported by Deloitte.

Advertisements

Estimating Equilibrium Real Exchange Rate MSc.Student: Petcu Supervisor:

FROM THE COLLAPSE OF SOCIALISM TO THE CRISIS OF CAPITALISM FROM THE COLLAPSE OF SOCIALISM TO THE CRISIS OF CAPITALISM Experiences of Central and Eastern.

EMU and the euro... (for dummies?) Presentation by Nigel Nagarajan Faculty Orientation for the 2009 Euro Challenge New York, November 25 th 2008 The 2009.

EMU and the euro... (for dummies?) Presentation by Nigel Nagarajan Student Orientation – 2009 Euro Challenge Miami-Florida European Union Center of Excellence.

History of European integration European Payments Union European Coal and Steel Community Treaty of Rome 1970s & 1980s - Expansion.

Global Geopolitical Change Regionalizing Europe. Supranational Economic Organizations.

Concepts of Equilibrium Exchange Rates Rebecca Driver and Peter Westaway.

Estimates of the Fundamental Equilibrium Exchange Rate of Kuna Katja Gattin Turkalj Croatian National Bank.

An Estimate of the Equlibrium Excgange Rate for Romania A BEER Approach Adrian Codirlasu Research and Publications Department National Bank of Romania.

C h a p t e r eighteen © 2006 Prentice Hall Business Publishing Economics R. Glenn Hubbard, Anthony Patrick O’Brien—1 st ed. Prepared by: Fernando & Yvonn.

International Monetary System Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 10.

Macroeconomics Basics.

Emerging Markets & Transition Economies Jens Hölscher Vice President European Association for Comparative Economic Studies University of Brighton.

Exchange Rate Regimes and the Euro MBA W7 Professor Dermot McAleese.

The Economy of the European Union European Economic and Trade Office 歐洲經貿辦事處.

European and Asian monetary cooperation and integration from the perspective of comparative regional political economy (CRPE) Thomas Kalinowski Ewha Womans.

An emerging political system?

1 Global Currency in the Future Professor Stefan Collignon Monetary cooperation between Asia and Europe Mizuho Research Institute Ltd. Tokyo 24 November.

COMENIUS PROJECT Building the future on the foundations of the past : comparing local architecture EUROPEAN UNION HISTORY, GEOGRAPHY AND MORE.

The United Kingdom & the EU (the Single Currency)

Slide 1 Amy Medearis, Senior Economist Delegation of the European Commission to the United States From Europe to the Euro Amy Medearis Senior Economist,

Reichstag, 1945 Frankfurter Allee, 1945 A Climate for Radical Change:

The Response of Europe to the Collapse of Bretton Woods

HUNGARY: the Reliable Partner No political risk No strikes No social conflicts No institutional risk Completed deregulation EU compatible institutions.

Jaromír Šindel ECES Monetary or Exchange Rate Based Stabilization Programme The Puzzles of Central and Eastern Europe Transformation and Integration ECES,

Exchange rates and exchange rate regimes International Finance

Chapter 20Copyright ©2010 by South-Western, a division of Cengage Learning. All rights reserved 1 ECON Designed by Amy McGuire, B-books, Ltd. McEachern.

International Finance

Exchange Rate Regimes and Sustainable Parities for CEECs in the Run-up to EMU Membership Virginie Coudert, Cécile Couharde z Aim of the paper: Provide.

Dr. Gunther Schnabl, Tübingen University1 The Emergence of the Euro Zone An Informal Euro Standard as a First Step for EMU Membership of the CEE Countries.

Implications of EU accession for Bulgarian Economy and perspectives for Korea-Bulgaria economic cooperation Sofia, UWDE, 3 May, 2007 Bulgaria's Monetary.

BULGARIAN ECONOMY ON THE ROAD TO EUROPEAN UNION AND ECONOMIC AND MONETARY UNION IVAN ISKROV GOVERNOR BULGARIAN NATIONAL BANK 14 July 2006 Athens.

Evaluating Economic Performance after Twenty Years of Transition in Central and Eastern Europe Andrew Harrison Teesside University Business School.

10 years of success - now the real challenge begins

EUROPEAN UNION. WHAT Coalition of 30 countries united in ECONOMY World’s largest trading bloc. World’s largest exporter to the world 16 TRILLION *Biggest.

Chapter 29 Open economy macroeconomics David Begg, Stanley Fischer and Rudiger Dornbusch, Economics, 6th Edition, McGraw-Hill, 2000 Power Point presentation.

Alexander Consulting Enterprise 10/16/2015 The European Union and the EURO.

1 International Finance Chapter 19 The International Monetary System Under Fixed Exchange rates.

1945  Second World War ended  Europe united as the European Coal and Steel Community, the founding members of this organisation were Belgium, France,

11 From Europe to the Euro 2011 Euro Challenge orientation

György Szapáry Central European University 1 Monetary Policy during Transition: Issues and Challenges in the New EU Members, with Lessons for Latin America.

The Last Shall Be the First: The East European Financial Crisis, Anders Åslund Senior Fellow Peterson Institute for International Economics, Washington,

Searching European Identity Latvian 3rd Year of Membership in the European Union Andzs Ubelis MSC Eco. student Cardiff University Deputy State Secretary,

International Finance FINA 5331 Lecture 6: Exchange rate regimes Read: Chapters 2 Aaron Smallwood Ph.D.

Economic and Political Challenges of Acceding to the Euro area BULGARIA Georgi Angelov, OSI-Sofia.

South East Europe in an Environment of Volatile Capital Flows Sarajevo, June 5 and 6, 2014 Michael Faulend

European Union *Single Currency *Enlargement *Constitution.

1 International Macroeconomics Chapter 8 International Monetary System Fixed vs. Floating.

© The McGraw-Hill Companies, 2008 Chapter 34 Exchange rate regimes David Begg, Stanley Fischer and Rudiger Dornbusch, Economics, 9th Edition, McGraw-Hill,

May 2008Gunther Schnabl, Leipzig University & CESIfo1 Exchange Rate Stabilization and Growth in Small Open Economies at the EMU Periphery Gunther Schnabl.

1 Global imbalances and the adjustment mechanism HEINER FLASSBECK Director Division on Globalization and Development Strategies.

Unit 2 Glossary. Macroeconomics The study of issues that effect economies as a whole.

International Monetary System Chapter Objectives Explain how exchange rates influence the activities of domestic and international companies.

INTERNATIONAL BUSINESS Unit 2 Business Development GCSE Business Studies.

The Balance of Payments & Exchange Rates. Balance of Payments The total of all economic transactions between a nation and the rest of the world Credits-

European Union Duy Trinh.

Economic and Monetary Union

Monetary Union.

Witold M.Orłowski Chief Economic Advisor, PwC Polska June 28, 2017

Competiveness and Sustainability of the Euro

Comments by Ricardo V. Lago

Comments by Ricardo V. Lago

Presentation transcript:

Over- or Undervalued Euroland Entry? Jens Hölscher University of Brighton Mariusz Jarmużek CASE Foundation

Structure introduction points of reference historical examples Fundamental Equilibrium Exchange Rate estimates of the FEER for Poland the pre-ERM-II scenario strategic choice under EU restrictions conclusion

Points of reference Bofinger, M., Wollmershäuser, T. (2002): EU Accession Countries: What Path to successful EMU Membership, in: Winkler, A. (ed.): Banking and Monetary Policy in Eastern Europe, Palgrave Bratkowski, A., Rostowski, J. (2001): Why Unilateral Euroization Makes Sense for (some) Applicant Countries - a response, with particular reference to Poland Driver, Rebecca and Peter Westaway (2001) Concepts of Equilibrium Real Exchange Rates, Bank of England Frowen, S. F., Hölscher, J. (eds.) (1997) : The German Currency Union of A Critical Assessment, Macmillan Hölscher, J. (ed.) (2001): Fifty Years of the German Mark, Palgrave Orlowski, Lucjan T. (2000): A Dynamic Approach to Inflation Targeting in Transition Economies, Williamson, John ed. (1994) Estimating Equilibrium Exchange Rates, Washington, Institute for International Economics

Historical Examples Overvalued ERM-I entry –UK 1990 –East Germany 1990 Undervalued Bretton Woods entry –West Germany after 1950/51

The Pre-ERM-II Scenario success: Hungary on edge: Poland critical: Czech Republic Safe option: currency board –Bulgaria and the Baltics

Real exchange rate (%change, qoq)

Real exchange rate Jan 1995=100

Competitiveness and the External Balance Hungary

Competitiveness and the External Balance Poland

Competitiveness and the External Balance Czech Republic

Competitiveness and the External Balance Estonia

Competitiveness and the External Balance Lithuania

Competitiveness and the External Balance Bulgaria

Fundamental Equilibrium Exchange Rate model of trend current account structural capital flows sustainable current account

Model of the trend current account model of aggregate trade –replacement of the actual value of exports and imports with the values the models predict –trade elasticities ensuring internal balance of the economy model of trend output –Hodrick-Prescott filter approach model of the trend current account consistent with internal balance

Structural capital flows and sustainable current account the current account account corresponding to external balance estimating the real exchange rate compatible with internal and external balance

Estimates of the FEER for Poland

Estimates of the FEER for Estonia

Estimates of the FEER for Lithuania

Estimates of the FEER for Bulgaria

Estimates of the FEER for the Czech Republic

Estimates of the FEER for Hungary

Strategic Choice under EU Restrictions (= Maastricht Straight Jacket) currency board peg + managed float delayed entry

Conclusion To avoid an overvalued ERM-II entry rate a strategy of stability oriented exchange rate undervaluation is advisable. Alternatives are delay or currency boards (= Euroisation?)