Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83537
Authors: 
Csajbók, Attila
Rezessy, András
Year of Publication: 
2005
Series/Report no.: 
MNB Occasional Papers 37
Abstract: 
This article investigates the potential impact of a shift in market expectations about a country's eurozone entry date on long-term yields and the spot exchange rate in a simple uncovered interest parity (UIP) framework. The results suggest that the size of the reactions depend on how far the entry date is postponed, how far current inflation is from the Maastricht-satisfying level, and whether the credibility of the central bank's target inflation path is sensitive to changes in the expected entry date. In the empirical part, the authors apply the framework for Hungary and draw some policy conclusions for the timing of ERM II entry.
Subjects: 
monetary policy
monetary union
expectations
euro zone entry
uncovered interest parity
JEL: 
E42
E52
F33
F42
Document Type: 
Working Paper

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