Real Exchange Rate Dynamics and Output Contraction under Transition
AbstractTwo major stylized facts that emerged during the early transition experience of the economies of Central and Eastern Europe were the fall in output and the appreciation of the real exchange rate. In this paper, we attempt to give a theoretical explanation, beyond that found in the existing literature, for the emergence of these two facts, which relies on the role of two basic characteristics of these economies in the early stages of transition. The first refers to their structure involving the existence of an almost liberalized price system for domestic output, a large part of which, however, was still produced by state firms and the second to the nature of the disturbances they initially encountered.
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Bibliographic InfoPaper provided by Bank of Greece in its series Working Papers with number 29.
Length: 25 pages
Date of creation: Nov 2005
Date of revision:
Transition economies; real exchange rate dynamics; output decline; structural reform; price liberalization.;
Find related papers by JEL classification:
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-11-18 (All new papers)
- NEP-CBA-2006-11-18 (Central Banking)
- NEP-IFN-2006-11-18 (International Finance)
- NEP-TRA-2006-11-18 (Transition Economics)
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