Show Less
Restricted access

Equilibrium Exchange Rates of Central and Eastern European Countries on the Road to the European Monetary Union

Series:

Jörg Rahn

The upcoming enlargement of the European Monetary Union involves the selection of appropriate reference rates at which the exchange rates of the accession countries will be fixed against the euro in order to avoid economic distortions as consequences of serious exchange rate misalignments. Determination of an exchange rate that is neither undervalued nor overvalued raises the issue of equilibrium exchange rates. Based on time series as well as panel estimation techniques three different concepts – BEER, PEER and PPP – are applied in this study to calculate equilibrium exchange rate levels for ten Central and Eastern European countries. The results indicate significant real misalignments in a number of accession countries.
Contents: Developments of exchange rates and exchange rate regimes in ten Central and Eastern European Countries – Concepts to calculate equilibrium exchange rates – Appliance of three methods based on time series as well as panel estimation techniques: BEER, PEER and PPP – Determination of misalignments in real effective terms as well as in nominal terms against the euro.