Revisiting the asymmetric impacts of the exchange market pressure on the inflation, interest rate and foreign trade balance in Eastern Europe

Oguzhan Ozcelebi*, Kaya Tokmakcioglu, Emre Su

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

7 Citations (Scopus)

Abstract

This study examines the relationship between the exchange market pressure (EMP) and macroeconomic and financial variables for Eastern European countries. The increase/decrease in the EMP influences the probability of a currency crisis, while this phenomenon may negatively/positively affect the foreign trade balance and may obstruct/facilitate foreign debt service in the Czech Republic and Poland due to the need for imported inputs for domestic production. We also consider that the effects of EMP can be asymmetrical and be opposed to regimes changes; furthermore, we find for the Czech Republic, Hungary, and Poland that changes in the EMP may affect the probability of a broad financial crisis.

Original languageEnglish
Pages (from-to)2517-2538
Number of pages22
JournalEmpirical Economics
Volume61
Issue number5
DOIs
Publication statusPublished - Nov 2021

Bibliographical note

Publisher Copyright:
© 2020, Springer-Verlag GmbH Germany, part of Springer Nature.

Keywords

  • Asymmetry
  • EMP
  • Nonlinear VAR
  • Qual VAR

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