The Real Exchange Rate Misalignment in the Five Central European Countries

Jan Frait (), Lubos Komarek () and Martin Meleck
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Martin Meleck: University of New South Wales, Sydney
Authors registered in the RePEc Author Service: Martin Melecky ()

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: The paper focuses on the developments of real exchange rates and their fundamental determinants in the five new EU Member States (Czech Republic, Hungary, Poland, Slovakia, and Slovenia). First, the approaches that can be used for estimation of equilibrium real exchange rates are briefly discussed. Then, we use well-established determinants of real exchange rates associated with the behavioral equilibrium exchange rate (BEER) approach to assess misalignments of the real exchange rates for the five new EU Member States. The estimates of the equilibrium exchange rates are obtained by means of both purely statistical approaches (HP filter, band-pass filter) and applying several multivariate estimation methods to our reduced-form BEER model. The results obtained indicate that the tendency towards appreciation of real exchange rates in the economies under consideration have been driven primarily by fundamental determinants.

Keywords: Exchange rate misalignments; equilibrium exchange rates; ERM II; Central European Countries (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-eec, nep-fmk, nep-ifn and nep-tra
Date: 2006
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Persistent link: http://EconPapers.repec.org/RePEc:wrk:warwec:739

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