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Abstract

The Great Recession affected export and import patterns in our sample of new EU member countries, and these changes, coupled with a more volatile external environment, have a profound impact on our estimates of real exchange rate misalignments and projections of sustainable real exchange rates. We find that real misalignments in several countries with pegged exchange rates and excessive external liabilities widened relative to earlier estimates. While countries with balanced net trade positions may experience sustainable appreciation during 2010-2014, several currencies are likely to require real depreciation to maintain sustainable net external debt.

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Bibliographic Info

Paper provided by Czech National Bank, Research Department in its series Working Papers with number 2011/01.

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Date of creation: Aug 2011
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Handle: RePEc:cnb:wpaper:2011/01

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Related research

Keywords: Foreign direct investment; Great Recession; new EU member states; sustainable exchange rates.;

Other versions of this item:

Find related papers by JEL classification:

• F31 - International Economics - - International Finance - - - Foreign Exchange
• F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
• F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
• F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications

This paper has been announced in the following NEP Reports:

• NEP-ALL-2011-09-16 (All new papers)
• NEP-CBA-2011-09-16 (Central Banking)
• NEP-EEC-2011-09-16 (European Economics)
• NEP-OPM-2011-09-16 (Open Economy Macroeconomic)
• NEP-TRA-2011-09-16 (Transition Economics)

References

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Cited by:

1. Viktors Ajevskis & Ramune Rimgailaite & Uldis Rutkaste & Olegs Tkacevs, 2012. "The Assesment of Equilibrium Real Echange Rate of Latvia," Working Papers 2012/04, Latvijas Banka.
2. Michal Franta & Jozef Barunik & Roman Horvath & Katerina Smidkova, 2011. "Are Bayesian Fan Charts Useful for Central Banks? Uncertainty, Forecasting, and Financial Stability Stress Tests," Working Papers 2011/10, Czech National Bank, Research Department.
3. Tomas Havranek & Zuzana Irsova, 2011. "Determinants of Horizontal Spillovers from FDI: Evidence from a Large Meta-Analysis," Working Papers 2011/07, Czech National Bank, Research Department.
   
   • Iršová, Zuzana & Havránek, Tomáš, 2013. "Determinants of Horizontal Spillovers from FDI: Evidence from a Large Meta-Analysis," World Development, Elsevier, vol. 42(C), pages 1-15.

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