Impact of Exchange Rate on Macroeconomy, 1996-2007 - Comparative study of Estonia and Lithuania
Impact of Exchange Rate on Macroeconomy, 1996-2007 - Comparative study of Estonia and Lithuania

Summary/Abstract: The study analyses the features of the current monetary policy in the Baltic economies under the re-pegging of national currencies to euro in the pre-accession to the EU. Using the effective exchange rates in the econometric co-integrative modeling, the authors attempted to identify some interrelations between the changes in both euro and national currencies flows in the Baltic States, on the one side, and within some interconnected macroeconomic variables, on the other side, were. An attention is given to the identification of the currency anchoring influence onto the structural macroeconomic indicators using the distributed lag analysis of flows normalized to the previous pegging (LTL to USD and kroon to DEM and their re-pegging to euro). Some peculiarities of dynamical changes in the nominal and the real effective exchange rates, their influence on the macroeconomic indices (in particular, sectoral gross value added, tradable and non-tradable sectors) are also simulated.

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