Autore
Coutinho, Leonor

Titolo
Euro exchange rates: what can be expected in terms of volatility?
Periodico
European University Institute of Badia Fiesolana (Fi). Department of Economics - Working papers
Anno: 1999 - Fascicolo: 20 - Pagina iniziale: 1 - Pagina finale: 40

This paper discusses some of thè issues related to thè determi-nation of thè future behavior of euro exchange rates. It considera thè impact of European-wide productivity and velocity distur-bances on 'portfolio' diversification in Europe, under a single cur-rency. The new currency may be less volatile than thè pre-existing European currencies given that thè aggregate GDP growth may be more stable and more correlated with GDP growth in thè US and Japan. However, although productivity trends are not likely to change dramatically, thè behavior of velocity can change sub-stantially, during or after thè change in regime. The extent to which this will be relevant will depend on thè policy choices of thè ECB, since there are some policy rules, such as nominai income targeting, more appropriate than others for insulating thè economy from velocity disturbances.



Testo completo: http://www.iue.it/ECO/WP-Texts/ECO99-20.pdf

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