BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 11/2003:
Bilaterial equilibrium exchange rates of EU accession countries against the euro
Jörg Rahn ()
Abstract: We apply BEER and PEER approaches to calculate real
equilibrium exchange rates for five EU accession countries in central and
east Europe. Bilateral nominal equilibrium exchange rates against the euro
are obtained through algebraic transformation of the results. Panel
cointegration techniques are used to check the adequacy of the empirical
model. The results reveal substantial overvaluations of the real exchange
rate in several EU accession countries. Overvaluation is even higher when
these exchange rates are expressed in nominal terms against the euro.
Keywords: real exchange rates; equilibrium exchange rates; transition economies; panel cointeg; (follow links to similar papers)
JEL-Codes: C23; F31; F41; (follow links to similar papers)
33 pages, September 4, 2003
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