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Title:Monetary convergence and risk premiums in the EU candidate countries PDF Logo
Authors:Orlowski, Lucjan T.
Issue Date:2002
Series/Report no.:ZEI working paper B 26-2002
Abstract:This study examines the link between various monetary policy regimes and the ability to manage inflation and exchange rate risk premiums in the EU candidate countries as they undergo monetary convergence to the eurozone. The underlying hypothesis is that a system of 'flexible inflation targeting' may be an optimal policy choice for managing these two categories of risk. A model of inflation and exchange rate risk premiums within the context of inflation targeting is proposed. Recent trends in these risk premiums in Hungary, the Czech Republic and Poland are tested by using the GARCH (1,1) methodology.
Subjects:inflation risk premium
exchange rate risk premium
inflation targeting
monetary convergence
transition economies
JEL:E32
E52
P33
Document Type:Working Paper
Appears in Collections:ZEI Working Papers, Zentrum für Europäische Integrationsforschung, Universität Bonn

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