EXCHANGE RATE AND OUTPUT VULNERABILITY TO MACROECONOMIC SHOCKS IN SELECTED CEECS (SVAR APPROACH)
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After the entry to the European Monetary Union new European Union member countries loose ability to perform sovereign monetary policy. It is usually mentioned that after the euro adoption these countries will not be able to control the potential inflation pressures under the common monetary policy performed by the European central bank. Another key aspect of the euro adoption is the loss of the ability to manage the exchange rate that is considered to be a very useful absorber of the structural shocks that affect the national economy. At the same time the ability of the exchange rate to absorb or stimulate the potential effects of the exogenous structural shocks to the domestic output development could be different among the new European Union member countries. In the paper the author analyzes the impact of the main structural macroeconomic (nominal, demand and supply) shocks to the exchange rates (NEER, REER) and output (real GDP) development in the Visegrad countries in the period 1995-2007 using the structural vector autoregression (SVAR) model.
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