Fundamental equilibrium exchange rate for the Polish zloty

Michał Rubaszek

No 35, NBP Working Papers from Narodowy Bank Polski

Abstract: In May 2004 Poland joined the European Union and is thereby committed to introduce the euro in the forthcoming years. The balance of costs and benefits of the euro adoption depends on the decision of the Polish and European authorities concerning the level of central parity in the ERM II, and subsequently the conversion rate of the zloty. In order to address the issue of an "ideal" level of the real exchange rate this paper proposes a model which is applied to estimate the level of the equilibrium of the zloty. The results indicate that at the end of 2004 the zloty was undervalued by 4.3%.

Keywords: conversion rate; equilibrium exchange rate; foreign trade model; cointegration (search for similar items in EconPapers)
JEL-codes: F12 F31 F41 (search for similar items in EconPapers)
Pages: 27
Date: 2005
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Citations: View citations in EconPapers (1)

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