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Title:A Nash threat game of passing through Exchange Rate Mechanism II PDF Logo
Authors:Fahrholz, Christian
Issue Date:2007
Series/Report no.:Jena economic research papers 2007,050
Abstract:Following entrance into the European Union, Central Eastern European Countries (CEECs) are expected to join the European Monetary Union (EMU). These countries may incur considerable costs over the course of their passing through the required Exchange Rate Mechanism II (ERM-II). However, with enough bargaining leverage CEECs may be able to pass some of these costs on to current EMU-members. In turn, a CEEC’s leverage depends on their ability to wield successful brinkmanship via an exchange-rate policy characterized by a ‘threaten-thy-neighbor’ strategy. A two-stage Nash-threat game captures the essentials of the CEECs’ phase of ERM-II pass through.
Subjects:Threat game
Nash-bargaining solution
exchange-rate policy
EU-enlargement
EMU
JEL:C72
C78
F33
F51
Document Type:Working Paper
Appears in Collections:Jena Economic Research Papers, MPI für Ökonomik

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