The Effect of Nominal Exchange Rate Volatility on Real Macroeconomic Performance in the CEE Countries
GATE Working Paper No. 09-34
27 Pages Posted: 18 Feb 2010 Last revised: 21 Jan 2011
Date Written: December 1, 2009
This paper analyzes the relation between nominal exchange rate volatility and several macroeconomic variables, namely real per output growth, excess credit, foreign direct investment (FDI) and the current account balance, in the Central and Eastern European EU Member States. Using panel estimations for the period between 1995 and 2008, we find that lower exchange rate volatility is associated with higher growth, higher stocks of FDI, higher current account deficits, and higher excess credit. The results are economically and statistically significant, and robust.
Keywords: EU, Exchange Rate Volatility, Growth, FDI, Credit, Current Account
JEL Classification: F3, F4, F5
Suggested Citation: Suggested Citation