DEVALUATION AND OUTPUT IN FIVE TRANSITION ECONOMIES: A PANEL COINTEGRATION APPROACH OF POLAND, HUNGARY, CZECH REPUBLIC, SLOVAKIA AND ROMANIA, 1993-2000

Applied Econometrics and International Development, 2006, vol. 6, issue 1

Abstract: This paper assesses the impact of devaluations on aggregate output for a group of five transition economies during the period 1993-2000. An application of panel unit root tests and panel cointegration establishes the presence of a long run relationship between real output, real exchange rates, real money and real wages, while the estimation of the long run relationship reveals that devaluations are contractionary in the long run. This finding is in contrast with a large part of the literature, which discern no long run effect on output.

Keywords: Exchange Rates; Devaluation; Output; Panel Cointegration; Transition Economies; EU Accession (search for similar items in EconPapers)
JEL-codes: F31 (search for similar items in EconPapers)
Date: 2006
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