Exchange Market Pressure on the Croatian Kuna
Srđan Tatomir, Institute of Public Finance, Zagreb; University of Amsterdam
Currency crises exert strong pressure on currencies often causing costly economic adjustment. A measure of exchange market pressure (EMP) gauges the severity of such tensions. Measuring EMP is important for monetary authorities that manage exchange rates. It is also relevant in academic research that studies currency crises. A precise EMP measure is therefore important and this paper re-examines the measurement of EMP on the Croatian kuna. It improves it by considering intervention data and thresholds that account for the EMP distribution. It also tests the robustness of weights. A discussion of the results demonstrates a modest improvement over the previous measure and concludes that the new EMP on the Croatian kuna should be used in future research.
Keywords: exchange market pressure, currency crisis, Croatia
Year: 2009 | Volume: 33 | Issue: 2 | Pages: 187 - 199
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