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|dc.description.abstract||Exchange-rate policies of Central Eastern European Countries (CEEC) have oftenbeen a subject matter. Yet, some new insights in terms of political economyconsiderations upon exchange-rate policy are provided. It is pointed out that it ismore appropriate to analyse exchange-rate policy in course of Exchange RateMechanism II (ERM II) with regard to a changing incentive structure. In doing so,considerable moral hazard problems become apparent.ERM II shall provide for an adequate level of convergence between prospective andcurrent members of European Monetary Union (EMU). However, this institutionalarrangement and, particularly, its impact on the incentives for exchange-rate policymaking might enable CEEC to load considerable costs of convergence onto currentmembers. Accordingly, the phase of ERM II is considered to be a bargaining on thedistribution of costs of convergence between prospective and current members ofEMU. In return, accession countries would offer to maintain public support forEuropean integration. The CEEC? leverage in this bargaining rests on brinkmanship,i.e. putting exchange-rate regimes at risk, thus possibly undermining the accordingpublic support.This paper delineates the basic assumptions and conditions for successfulbrinkmanship, points out the specific transmission mechanisms, and characterisesthis kind of exchange-rate policy as ?threaten-thy-neighbour?. Overall analysis resultsin a cautious outlook on probable effects of such strategic exchange-rate policies onEuropean institutional and economic matters.||en_US|
|dc.relation.ispartofseries|||aEzoneplus working paper |x14||en_US|
|dc.subject.stw||Europäische Wirtschafts- und Währungsunion||en_US|
|dc.title||Strategic Exchange-Rate Policy of Accession Countries in ERM II||en_US|
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