Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/68208
Authors: 
Kočenda, Evzen
Maurel, Mathilde
Schnabl, Gunther
Year of Publication: 
2012
Series/Report no.: 
CESifo Working Paper: Monetary Policy and International Finance 4018
Abstract: 
The European sovereign debt crisis revived the discussion concerning the pros and cons of exchange rate adjustment in the face of asymmetric shocks. Exit from the euro area is to regain rapidly international competitiveness. Exchange rate stability with structural reforms could be beneficial for long-run growth. We augment the literature by analyzing short- and long-term growth effects of exchange rate flexibility in a panel-cointegration framework. Countries with a high degree of exchange rate stability exhibit lower short-term and higher long-term growth. The degree of business cycle synchronization with the anchor country matters for the impact of exchange rate flexibility on growth.
Subjects: 
exchange rate adjustment
sterilization
European sovereign debt crisis
JEL: 
C54
E32
E42
F32
F33
N20
Document Type: 
Working Paper

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