Extreme Risks in Financial Markets and Monetary Policies of the Euro-Candidates
Wiesbaden Institute for Law and Economics
Lucjan T. Orlowski
Sacred Heart University - John F. Welch College of Business
Comparative Economic Studies, Vol. 53, Issue 4, pp. 511-534, 2011
This study investigates extreme tail risks in financial markets of the euro-candidate countries and their implications for monetary policies. Our empirical tests show the prevalence of extreme risks in the conditional volatility series of selected financial variables, that is, interbank rates, equity market indexes and exchange rates. We argue that excessive instability of key target and instrument variables should be mitigated by monetary policies. Central banks in these countries will be well-advised to use both standard and unorthodox (discretionary) tools of monetary policy while steering their economies out of the financial crisis and through the euro-convergence process.
Number of Pages in PDF File: 24
Date posted: December 1, 2011
© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollobot1 in 0.156 seconds