Real Exchange Rates in Small Open OECD and Transition Economies: Comparing Apples with Oranges?

Balázs Égert, Kirsten Lommatzsch () and Amina Lahrèche-Révil ()

No wp859, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: We find that productivity gains in tradables cause an appreciation of the real exchange rate via both tradable and nontradable prices in the CEE-5 and have no affect in the Baltic countries, while they lead to a depreciation of the real exchange rate of tradables in OECD economies that overcompensates the appreciation due to nontradable prices. Rising net foreign liabilities lead to a real appreciation in the Baltic countries instead of the expected depreciation found in OECD and CEE-5 countries. These differences are due to the different impact of the fundamentals on the real exchange rate depending on the time horizon studied.

Keywords: real exchange rate; equilibrium exchange rate; productivity; tradables; Balassa-Samuelson effect (search for similar items in EconPapers)
JEL-codes: C15 E31 F31 O11 P17 (search for similar items in EconPapers)
Pages: pages
Date: 2007-01-01
New Economics Papers: this item is included in nep-cba and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Real Exchange Rates in Small Open OECD and Transition Economies: Comparing Apples with Oranges? (2007)
Journal Article: Real exchange rates in small open OECD and transition economies: Comparing apples with oranges? (2006)
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