Crisis Resistance Versus Monetary Regime: A Polish-Slovak Counterfactual Exercise

• Autorzy: Andrzej Torój , Karolina Konopczak
• Języki publikacji: EN

Abstrakty

EN

In the public debate, it is argued that Poland avoided a massive drop in output during the 2008/2009 economic crisis in part thanks to substantial nominal zloty's depreciation against the euro. The Polish case is often contrasted with Slovakia that adopted the euro in January 2009 and, since the Ecofin Council decision in summer 2008, exhibited virtually no nominal exchange rate volatility while facing deep losses in output. In this paper we attempt to validate this contrast by reversing the roles, i.e. checking if Poland really would have faced the same drop - and Slovakia would have remained relatively resilient - if it had been Poland, not Slovakia, that adopted the euro at that point. Our counterfactual simulations based on a New Keynesian DSGE model indicate that, indeed, the Polish tradable output could have been 10-15 percent lower than actually observed in 2009, while the Slovak one - approximately 20 percent higher. This asymmetry results mainly from structural differences between the two economies, such as size, openness, share of nontradable sector and foreign trade elasticities. The difference of this size would have been short-lived (3-4 quarters), and the difference of the nontradable output would have been of much lower magnitude. (original abstract)

Słowa kluczowe

EN

Currency systems; Simulation; Eurozone; Dynamic Stochastic General Equilibrium (DSGE)

PL

Systemy walutowe; Symulacja; Strefa euro; Model dynamicznej stochastycznej równowagi ogólnej

• Czasopismo: Central European Journal of Economic Modelling and Econometrics (CEJEME)
• Rocznik: 2012
• Tom: 4
• Numer: nr 1
• Strony: 1--22

Twórcy

autor

Andrzej Torój

• Warsaw School of Economics, Poland

autor

Karolina Konopczak

• Warsaw School of Economics, Poland; Ministry of Finance in Poland

Bibliografia

• Brzoza-Brzezina M., Makarski K., Wesołowski G. (2012): Would it have paid to be in the eurozone?, National Bank of Poland Working Paper, 128.
• Calvo G. (1983): Staggered prices in a utility-maximizing framework, Journal of Monetary Economics, 12(3), 383-398.
• Chari V.V., Kehoe P.J., McGrattan E.R. (2002): Can sticky price models generate volatile and persistent real exchange rates?, Review of Economic Studies, 69(3), 533-563.
• Clarida R., Gali J., Gertler M. (1999): The science of monetary policy: a New Keynesian perspective, Journal of Economic Literature, 37(4), 1661-1707.
• Erzeg C., Henderson D., Levin A. (2000): Optimal monetary policy with staggered wage and price contracts, Journal of Monetary Economics, 46(2), 281-313.
• Fuhrer J.C. (2000): Habit formation in consumption and its implications for monetary-policy models , American Economic Review, 90(3), 367-390.
• Gali J. (2008): Monetary policy, inflation, and the business cycle: an introduction to the New Keynesian framework, Princeton University Press, Princeton.
• Gali J., Gertler M. (1999): Inflation dynamics: a structural econometric analysis, Journal of Monetary Economics, 44(2), 195-222.
• Harvey A.C. (1977): Discriminations between CES and VES Production Functions, Annals of Economic and Social Measurement, 6(4), 463-471.
• Kolasa M. (2009): Structural heterogeneity or asymmetric shocks? Poland and the euro area through the lens of a two-country DSGE model, Economic Modelling, 26(6), 1245-1269.
• Konopczak K., Marczewski K. (2011): Why so different from other CEECs - Poland's cyclical divergence from the euro area during the recent financial crisis, Bank i Kredyt, 42(2), 7-30.
• Lalinský T. (2010): Business Competitiveness after Euro Adoption in Slovakia, National Bank of Slovakia Occasional Paper, 3/2010.
• Slovenska N.B. (2004): Monetary programme of the NBS until the year 2008, Narodna Banka Slovenska, http://www.nbs.sk/_img/Documents/BIATEC/BIA01_05/2_3.pdf.
• Smets F., Wouters R. (2003): An estimated dynamic stochastic general equilibrium model of the euro area, Journal of the European Economic Association, 1(5), 1123-1175.
• Taylor J.B. (1993): Discretion versus policy rules in practice, Carnegie-Rochester Conference Series on Public Policy, 39(1), 195-214.
• Torój A. (2010): Macroeconomic adjustment after asymmetric shocks in a heterogeneous currency union: the euro area experience 1999-2009, mimeo.
• Torój A. (2011): Competitiveness channel in Poland and Slovakia: a pre-EMU DSGE evaluation, National Bank of Poland Working Paper, 86.
• Walsh C.E. (2010): Monetary theory and policy, MIT Press, Cambridge MA, USA.

Identyfikatory

DOI

DOI: 10.24425/cejeme.2012.119273