Are the Real Exchange Rates of the New EU Member Countries in Line with Fundamentals? – Implications of the NATREX Approach

Frenkel Michael () and Isabell Koske
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Frenkel Michael: WHU, Otto Beisheim School of Management, Department of Economics, Burgplatz 2, 56179 Vallendar, Germany

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 2012, vol. 232, issue 2, 129-145

Abstract: This paper derives equilibrium real exchange rates for the EU member countries that joined in 2004 and in 2007. Our analysis is based on the natural real exchange rate approach and uses data for the period 1980-2007. We employ a two-step estimation strategy to deal with the limited availability and reliability of data from these countries. We first estimate the model for a panel of 17 OECD countries and then apply the estimated relationship to the new EU member countries. While the model does not support the appreciation of some of the examined currencies in 2005-2007, the development of several other currencies of the CEECs appears to be fairly in line with our NATREX estimates.

Keywords: Exchange rate models; EMU; EU enlargement; Exchange rate models; EMU; EU enlargement (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:jns:jbstat:v:232:y:2012:i:2:p:129-145

DOI: 10.1515/jbnst-2012-0204

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