International Policy Coordination and Transmission

Exchange Rate Volatility and Labour Markets in the CEE Countries

JEL codes: 
E42, F36, F42
Version Date: 
Nov 2004

According to the traditional 'optimum currency area' approach, the case for adopting a common currency is stronger if the countries are subject to relatively similar output shocks. This Paper takes a different approach and highlights the fact that high exchange rate volatility may as well signal high costs for labour markets.

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