A joint CEPR workshop with the 21 Century Foundation, Sofia was held on 22/23 September. The workshop addressed `Convertibility and Exchange Rate Policy' in the context of the economic transformation of the countries of Central and Eastern Europe (CEECs). In particular, it focused on: the relationship between monetary and exchange rate policy in an unstable macroeconomic environment; macro performance under alternative exchange rate regimes; nominal and real exchange rate targeting; the pros and cons of fixed and flexible exchange rate regimes; the sequencing of financial liberalization and deregulation; speculative attacks and policies to deal with them; and the role of convertibility and exchange rate policy in the light of future EU membership. It was organized by Rumen Dobrinsky (21 Century Foundation) and Richard Portes (CEPR and London Business School) and was supported by the European Commission under its PHARE and ACE programmes.
In `Inflation, Interest and Exchange Rates in the Transition', Mario Nuti (Università di Roma and London Business School) compared different exchange rate regimes in transition economies. Dariusz Rosati (United Nations Economic Commission for Europe) presented `Exchange Rate Policies during the Transition from Plan to Market', focusing on the fundamental changes in economic conditions during this process and drawing lessons for the sequencing of exchange rate policies. In `Macro Performance under Alternative Exchange Rate Regimes', Atish Ghosh (IMF) presented the results of a comparative study of the relationship between exchange rate regimes and macroeconomic stabilization.
A number of papers were devoted to the experiences of individual countries with convertibility and exchange rate policies. Ryszard Kokoszczynski and Pawel Durjasz (National Bank of Poland) discussed the Polish experience in `From Fixed to Flexible Rate Regimes: The Case of Poland'. In `Fixed Exchange Rate Regimes in the Stages of Transition: Lessons from the Czech Case', Miroslav Hrncir (Czech National Bank) focused on the pros and cons of maintaining a fixed rate regime for a long period during transition. In `Stabilization and Exchange Rate Policy: The Case of Romania', Daniel Daianu (National Bank of Romania) emphasized the need for credibility and coherence of macroeconomic policies during the transition. In `Monetary Policy, Macroeconomic Adjustment and Currency Speculation under Floating Exchange Rates: The Case of Bulgaria', Rumen Dobrinsky focused on the importance of consistency between monetary and exchange rate policy under a floating regime. In `The Experience of Capital Account Convertibility', Marten Ross (Bank of Estonia) discussed the problems of financial liberalization and deregulation in the transition.
Two papers addressed different aspects of the Hungarian experience with an adjustable and subsequently crawling peg. In `Real Exchange Rates and Exchange Rate Policy in Hungary', László Halpern (Institute of Economics, Budapest, and CEPR) discussed alternative exchange rate measures, analysing different measures of external equilibrium. In `Exchange Rate Premia and the Credibility of the Crawling Target Zone in Hungary', Zsolt Darvas (National Bank of Hungary) examined the impact of the crawling peg regime and the results of econometric tests of the behaviour of the foreign exchange market. Two final papers reiterated some lessons from western experience with convertibility and exchange rate policy. Philippe Bacchetta (Studienzentrum Gerzensee, Université de Lausanne and CEPR) presented `Exchange Rate Policy and Disinflation: The Spanish Experience in the ERM', focusing on the difficult task of reconciling the goals of nominal convergence and exchange rate stabilization as a prerequisite for ERM participation. In `First Steps and Experiences in the EU: The Case of Austria', Heinz Gluck (Austrian National Bank) discussed the macroeconomic, monetary and fiscal adjustments resulting from full EU membership.