PL EN


2008 | 55 | 11 | 941-961
Article title

Interest-rate differentials, speculative capital flows and exchange-rate volatility

Title variants
Languages of publication
HU
Abstracts
EN
Interest rates on the Hungarian forint are higher than interest rates in the Euro area or other countries in the region. Interest-rate decisions are based on assessing several factors in monetary policy. This paper evaluates the effects of a sizable interest-rate differential between Hungary and the Euro area on the exchange rate and on its volatility. There is a difference in the effects of the interest-rate differential on the exchange rate in the short run and in the long run, but a higher interest-rate differential tends to increase exchange-rate volatility on both horizons. There is a triangular relation between interest-rate differential, speculative capital flows, and exchange-rate volatility. Any angle in this triangular relation points to the importance of the financial-stability consideration in forming monetary policy.
Year
Volume
55
Issue
11
Pages
941-961
Physical description
Document type
ARTICLE
Contributors
author
author
  • Istvan Abel, no address given, contact the journal editor
References
Document Type
Publication order reference
Identifiers
CEJSH db identifier
10HUAAAA07879
YADDA identifier
bwmeta1.element.ce19f933-fe6b-35a9-83d2-4fc5fbfc19f0
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