Simón Sosvilla-Rivero, Ph.D., Departamento de Economía Cuantitativa, Universidad Complutense de Madrid, Facultad de CC. Económicas y Empresariales, Campus de Somosaguas, Madrid, 28223, Spain, Francisco Ledesma-Rodríguez, Ph.D., Departamento de Análisis Económico, Universidad de La Laguna, Facultad de CC. Económicas y Empresariales, Campus de Guajara, La Laguna, 38071, Spain, and Jorge Pérez-Rodríguez, Ph.D., Departamento de Métodos Cuantitativos, Universidad de Las Palmas de Gran Canaria, Facultad de CC. Económicas y Empresariales, Campus de Tafira, Las Palmas de Gran Canaria, 35071, Spain.
This paper attempts to identify implicit exchange rate regimes for currencies of the Central and Eastern European Countries vis-à-vis the euro. To that end, we apply a sequential procedure that considers the dynamics of exchange rates to data covering the period from 1977:01 to 2006:02. Our results would suggest that implicit bands have existed in many subperiods for almost all currencies under study. Once we detect de facto discrepancies between de facto and de iure exchange rate regimes, we propose a model in order to explain these decisions.