Monetary and exchange rate policies, EMU and Central and Eastern Europe

Monetary and exchange rate policies, EMU and Central and Eastern Europe; forum report of the Economic Policy Initiative No. 5:

This report is the fifth title published under the auspices of the Economic Policy Initiative, launched by the Centre for Economic Policy Research and the EastWest Institute to strengthen and 'multilateralize' the public policy process in the Associated Countries and to assist their preparation for accession to the EU. The Report is based on the presentations of the fifth Forum held in Brussels on 20-22 November 1998 on 'Monetary and Exchange Rate Policies in Central and Eastern Europe and the Introduction of the EMU'. The Report examines three of the issues that need to be resolved in order that Europe's transition economies can find a robust strategy for macroeconomic policy leading up to accession and in preparation for joining EMU. Firstly, as transformation continues, how should policy-makers think about the actual and the desirable evolution of the real exchange rate in transition economies? Secondly, what nominal anchor should be adopted? The recent fate of narrowly pegged exchange rates suggests that other nominal anchors should at least be examined before opting for reliance on an exchange rate band. Thirdly, to what extent must any creditable monetary policy be underpinned by sound fiscal policy? Is fiscal policy adequately measured and can it really support tightly managed exchange rate policies in a world of high capital mobility?

The five chapters are; Introduction; Equilibrium exchange rates; Exchange rate regimes and monetary policies; The exchange rate: threats and responses; and fiscal support for successful exchange rate policy.