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Herrmann, S. Do We Really Know That Flexible Exchange Rates Facilitate Current Account Adjustment? Some New Empirical Evidence for CEE Countries. Applied Economics Quarterly, 55(4), 295-311. https://doi.org/10.3790/aeq.55.4.295
Herrmann, Sabine "Do We Really Know That Flexible Exchange Rates Facilitate Current Account Adjustment? Some New Empirical Evidence for CEE Countries" Applied Economics Quarterly 55.4, , 295-311. https://doi.org/10.3790/aeq.55.4.295
Herrmann, Sabine: Do We Really Know That Flexible Exchange Rates Facilitate Current Account Adjustment? Some New Empirical Evidence for CEE Countries, in: Applied Economics Quarterly, vol. 55, iss. 4, 295-311, [online] https://doi.org/10.3790/aeq.55.4.295

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Do We Really Know That Flexible Exchange Rates Facilitate Current Account Adjustment? Some New Empirical Evidence for CEE Countries

Herrmann, Sabine

Applied Economics Quarterly, Vol. 55 (2009), Iss. 4 : pp. 295–311

17 Citations (CrossRef)

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1Sabine Herrmann, Economics Department, Balance of Payments, Exchange Rates and Capital Markets Analysis Division, Wilhelm-Epstein-Str. 14, 60431 Frankfurt. Tel +49 69 9566 – 3785.

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Abstract

This paper examines the relationship between the exchange rate regime and the pace of current account adjustment. The panel data set we refer to includes 11 catching-up countries from Central and Eastern Europe between 1994 and 2007. The exchange rate regime is measured by a continuous z-score measure of exchange rate volatility proposed by Gosh, Gulde, and Wolf (2003). Based on a basic autoregression estimation, the results indicate that a more flexible exchange rate regime significantly enhances the rate of current account adjustment.

JEL Classification: F3, F4