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Real Exchange Rate Misalignments and Currency Crises in the Former Soviet Union Countries

Viktar Dudzich ()
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Viktar Dudzich: Prague University of Economics and Business

Comparative Economic Studies, 2022, vol. 64, issue 3, No 2, 384-416

Abstract: Abstract The paper explores the utility of real exchange rate misalignments from their equilibrium for identification of currency crises in the former Soviet Union countries. We estimate equilibrium exchange rates for 10 former Soviet Republics employing behavioural equilibrium exchange rate (BEER) and natural real exchange rate (NATREX) concepts and pooled mean group estimator. Subsequently, we compare the estimated misalignments before, during and after the currency crisis episodes and regress the misalignments on crisis-related variables. The results indicate that the misalignments tended to increase before the crises and visibly reduced after, thus serving as potentially viable predictors of such events.

Keywords: Real exchange rate; Equilibrium exchange rate; Exchange rate misalignment; Former Soviet Union (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1057/s41294-021-00178-9

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