The Currency Board in Bulgaria: Theoretical Reflections and Empirical Results

Abstract

The aim of the authors is to, via this article, further develop viewpoints regarding the point of intersection between theoretical views on the currency board and the empirical results reported in Bulgaria. In order to achieve this objective, the article has been structured as follows: part one – clarification of the nature of a currency board in light of leading theoretical research on this issue; part two – critical analysis and assessment of the specific features of the currency board in Bulgaria; part three – the rationale behind the authors’ view regarding the fundamental issue of the end of the currency board regime in Bulgaria and its replacement with another system; part four – econometric analysis and assessment of the impact of the external sector of economy on the GDP in Bulgaria under a fixed exchange rate and a high relative volume of foreign trade exchange of goods and services in terms of the GDP; part five – an investigation into the impact of the currency board on Bulgaria’s economic convergence with leading EU economies in the period between 1998 and 2012.