This paper provides empirical evidence that, irrespective of the foreign exchange rate regime, countries with high monetary volatility have lower relative output growth rates. It is argued that due to the forward looking nature of the foreign exchange market, exchange rate stability hinges on the stability of the institutional structure within which monetary and fiscal policies are formulated. Subsequently, the likely endogenous response in the accession countries upon entry into EU and EMU is examined. This provides arguments for a rapid transition phase, possibly complemented by a one sided euroisation as a commitment device

CEECs, EMU, exchange rate regime, growth
Monetary Policy (Targets, Instruments, and Effects) (jel E52), Foreign Exchange (jel F31), International Monetary Arrangements and Institutions (jel F33)
Tinbergen Institute Discussion Paper Series
Tinbergen Institute

van Foreest, P.W, & de Vries, C.G. (2002). The Forex Regime and EMU Expansion (No. TI 02-010/2). Tinbergen Institute Discussion Paper Series. Retrieved from