IV Variability of Exchange Rates
Author:
Mr. Owen Evens https://isni.org/isni/0000000404811396 International Monetary Fund

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Mr. Thomas H. Mayer https://isni.org/isni/0000000404811396 International Monetary Fund

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Mr. Philip M Young
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Horst Ungerer https://isni.org/isni/0000000404811396 International Monetary Fund

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Language:
English
Print Publication Date:
15 Dec 1986
Keywords:
OP; EMS; ERM; ERM currency; deutsche mark; EEC treaty; ERM country; EMS country; exchange rate variability; Exchange rates; Currencies; Financial statistics; Real exchange rates; Exchange rate adjustments; Southern Europe; Europe; EMS currency; EMS exchange rate mechanism; intra-ERM variability; variability of the EMS currency

Abstract

An assessment of exchange rate variability must be judgmental and is necessarily fraught with a variety of technical and conceptual difficulties. In this section, overall performance in terms of exchange rate variability is reviewed; the technical aspects are dealt with in a technical note at the end of this section. In order to assess the performance of the currencies participating in the EMS exchange rate mechanism, it would be desirable in principle to compare actual performance with estimated performance given the same exogenous world events, but in the absence of the EMS institutional apparatus. The requirements for constructing such a “counterfactual” experiment are, however, daunting. Therefore assessment has to be somewhat more limited and based on several elements: first, a comparison of exchange rate variability among the ERM currencies before and after the system’s inception; second, a comparison of exchange rate variability between participating and nonparticipating currencies;36 and third, an assessment of changes in exchange rate variability over time among the nonparticipating currencies. To the extent that a variety of different approaches all point in the same direction, some confidence can be placed in the results.

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Cover The European Monetary System
The European Monetary System
Recent Developments
ISBN:
9780939934799
ISSN:
0251-6365
Publication Date:
15 Dec 1986
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9780939934799.084
Pages:
82

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