 On Currency Misalignments within the Euro AreaVirginie Coudert (), Cécile Couharde () and Valérie Mignon () Post-Print from HAL Abstract: Although nominal parities have been completely pegged within the euro area since the launch of the single currency, real effective exchange rates have continued to vary under the effect of inflation disparities, exhibiting a strong appreciation in the peripheral countries. In this paper, we assess real exchange rate misalignments for euro area countries by using a behavioral equilibrium exchange rate (BEER) approach on the period 19802010. The results show that the peripheral member countries have been suffering from increasingly overvalued exchange rates since the mid-2000s, as their real appreciation has not stemmed from improving fundamentals in terms of productivity or external position. In addition, currency misalignments have increased on average for all euro area countries since the monetary union, while becoming more persistent. More worryingly, our findings highlight different patterns across members, as misalignments have been larger and more persistent in peripheral countries than in core countries. Date: 2013 Published in Review of International Economics, 2013, 21, pp.35 - 48. ⟨10.1111/roie.12018⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01385866 DOI: 10.1111/roie.12018 Access Statistics for this paper More papers in Post-Print from HAL |
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