The Link Between Real Exchange Rates and Capital Accounts in Central European Transforming Economies
Document Type
Peer-Reviewed Article
Publication Date
Fall 1997
Abstract
Real currency appreciations related to substantial capital inflows have complicated patterns of transformation to free-market economies in Central Europe. Hungary recognized the need for corrective action in the early 1990s and has been the most successful in combating the growth-retarding effects of real currency appreciation. At the other extreme, the Czech authorities largely ignored the problem and only recently have undertaken steps to repair their international balances. As a result, the Czech economy has stopped growing largely because of a loss in export sales. Poland's success in dealing with capital inflows lies between the Hungarian and Czech experiences. All three countries will likely devalue their currencies in the near term in attempts to stem further advances in the real value of their currencies and to better position themselves competitively for eventual accession to EU membership.
Recommended Citation
Orlowski, L. T. , & Corrigan, T. D. (1997). The link between real exchange rates and capital accounts in central European transforming economies. Journal of Emerging Markets, 2(3), 5-19.
