The Assesment of Equilibrium Real Echange Rate of Latvia

Viktors Ajevskis (), Ramune Rimgailaite, Uldis Rutkaste and Olegs Tkacevs
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Ramune Rimgailaite: Bank of Latvia
Uldis Rutkaste: Bank of Latvia

No 2012/04, Working Papers from Latvijas Banka

Abstract: The aim of this study is to estimate the equilibrium REER of Latvia, which was done by using different methodologies, including IMF CGER approach, and the NATREX and SVAR models. The IMF methodology implies the application of three different methods: the macroeconomic balance method, the external sustainability method and the reduced-form equilibrium real exchange rate method. The results of all approaches used in this study indicate that the real exchange rate of Latvia, after appreciation during the boom years and subsequent adjustment afterwards, remained close to its equilibrium level at the end of the sample period, i.e. at end-2010.

Keywords: equilibrium real exchange rate; BEER; macroeconomic balance; external sustainability; NATREX; SVAR; Latvia (search for similar items in EconPapers)
JEL-codes: F31 F32 O24 (search for similar items in EconPapers)
Date: 2012-09-03
New Economics Papers: this item is included in nep-cis
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:ltv:wpaper:201204

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