Open AccessMonetary determinants of deposit euroization in European post-transition countries
Author(s) -
Marina Tkalec
Publication year - 2013
Publication title -
panoeconomicus
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.289
H-Index - 14
eISSN - 2217-2386
pISSN - 1452-595X
DOI - 10.2298/pan1301089t
Subject(s) - cointegration , exchange rate , economics , monetary economics , differential (mechanical device) , monetary policy , interest rate , macroeconomics , econometrics , aerospace engineering , engineering
This paper investigates the long-run and short-run relationship between deposit euroization in twelve European post-transition economies and two determinants of deposit euroization that are under the influence of monetary policy: the exchange rate and the interest rate differential. The link between deposit euroization, exchange rates and interest rate differentials is investigated using Johansen cointegration and error correction models for each country separately. The results suggest that changes in both monetary drivers have significant effects on deposit euroization and are therefore important for explaining and fighting deposit euroization. Differences between exchange rate regimes, fixed and managed vs. floating, seem to matter for deposit euroization