Equilibrium exchange rates in the transition: the tradable price-based real appreciation and estimation uncertainty
Balázs Égert and
Kirsten Lommatzsch ()
No 9/2004, BOFIT Discussion Papers from Bank of Finland, Institute for Economies in Transition
This paper sets out to estimate equilibrium real exchange rates for the Czech Republic, Hungary, Po-land, Slovakia and Slovenia.A theoretical model is developed that provides an explanation for the ap-preciation of the real exchange rate based on tradable prices in the acceding countries.Our model can be considered as a competing but also completing framework to the traditional Balassa-Samuelson model.With this as a background, alternative cointegration methods are applied to time series (Engle-Granger, DOLS, ARDL and Johansen) and to three small-size panels (pooled and fixed effect OLS, DOLS, PMGE and MGE), which leaves us with around 5,000 estimated regressions.This enables us to examine the uncertainty surrounding estimates of equilibrium real exchange rates and the size of the underlying real misalignments. Keywords: Real exchange rate, equilibrium exchange rate, tradable prices, transition, cointegration JEL: F31
JEL-codes: F31 (search for similar items in EconPapers)
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Working Paper: Equilibrium Exchange Rates in the Transition: The Tradable Price-Based Real Appreciation and Estimation Uncertainty (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:bof:bofitp:2004_009
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