The equilibrium real exchange rate: pros and cons of different approaches with application to Latvia

Viktors Ajevskis (), Ramune Rimgailaite (), Uldis Rutkaste and Olegs Tkacevs
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Ramune Rimgailaite: Bank of Latvia, Riga, Latvia
Uldis Rutkaste: International Monetary Fund, Washington, DC, USA

Baltic Journal of Economics, 2014, vol. 14, issue 1-2, 101-123

Abstract: This paper studies various approaches to the equilibrium real effective exchange rate estimation, including structural and direct estimation approaches. It shows their strengths and weaknesses with application to the case of Latvia. Despite the approaches differing considerably in terms of their theoretical background and data used they all 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, namely at the end of 2010.

Keywords: BEER; FEER; Latvia; NATREX; SVAR (search for similar items in EconPapers)
JEL-codes: F31 F32 O24 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:bic:journl:v:14:y:2014:i:1-2:p:101-123

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