Real Exchange Rates in Transition Economies

Bostjan Jazbec

No 482, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: Paper attempts to develop a model suitable for an analysis of the real exchange rate determination in transition economies. The main distinction from other approaches to the real exchange rate determination is an introduction of the pre-transition period which enables one to separately examine the role of adverse initial conditions and labor market reallocation between the tradable and non-tradable good sectors believed to characterize the extent of structural reforms in transition economies. Empirical findings seem to confirm that transition - when looking only at the real exchange rate behavior - is over once the progress in structural reforms does not affect the real exchange rate determination relative to other factors. Along the lines of research on growth prospects in transition economies, the effect of structural changes on the real exchange rate in more advanced transition economies has on average diminished in the fifth year of the transition process. The results for less advanced economies are in line with other studies on transition.

Keywords: transition economies; real exchange rate; fixed-effects model (search for similar items in EconPapers)
JEL-codes: F31 F41 P22 P27 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2002-07-01
New Economics Papers: this item is included in nep-cba, nep-eec, nep-ifn and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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