We examine the insulating property of flexible exchange rates in CEE economies considering thatthey have adopted different regimes. We estimate a set of Bayesian structural VAR models withcommon serial correlations using data spanning 1998q1-2015q4. We derive the long-term iden-tifying restrictions from a macroeconomic model. We find that irrespective of the exchange rateregime, real shocks primarily drive output. However, its reactions to these shocks are substan-tially stronger under less flexible regimes, whereas the responses to nominal shocks are similar.Hence, the insulating property of flexible regimes can reduce the costs from economic shocks.