| EXCHANGE RATE POLICY IN TRANSITION ECONOMIES: THE INITIAL CHOICE AND THE SUBSEQUENT EXPERIENCE
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| by |
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| Christos Papazoglou, University of Crete |
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| JEL classification : F310, P270 |
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| Abstract |
| The paper focuses on the exchange rate policies of economies in transition and finds a significant degree of convergence of exchange rate policies. The empirical evidence is neither accidental nor opposing to the generally accepted view. Which is strengthened by the case of the six countries studied. The analysis shows that a fixed exchange rate may be especially useful anchor in the initial stages of liberalization, where price stabilization is given higher priority, and that a pegged exchange rate may not be the most appropriate policy choice during the subsequent stages of the transition process. Convergence of exchange rate policies occurs as these economies move into the latter stages of transition. This actually reflects a shift away from the two polar cases of either fixed or flexible exchange rates since for the majority of the transition economies the main reasons for initially adopting such regimes have ceased to exist. |
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