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Competitiveness in Bulgaria

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  • Piritta Sorsa
  • Dimitar Chobanov
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    Abstract

    This paper presents an empirical analysis of the medium- and long-term determinants of the real (effective) exchange rate (RER) of the Bulgarian lev using elements from the natural real exchange rate (NATREX) and the behavioral equilibrium exchange rate (BEER) approaches. The results indicate that the RER is driven by fundamentals, including labor productivity, terms of trade, world real interest rates, gross savings, and foreign direct investment. The model also shows that there is no significant misalignment of the Bulgarian lev.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 04/37.

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    Length: 25
    Date of creation: 01 Mar 2004
    Date of revision:
    Handle: RePEc:imf:imfwpa:04/37

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    Related research

    Keywords: Real effective exchange rates; Economic models; Terms of trade; Exchange rate assessments; exchange rate; real exchange rate; equation; exchange rates; statistic; cointegration; time series; real exchange rates; real effective exchange rate; equilibrium exchange rate; effective exchange rate; probability; statistics; fixed exchange rate; correlation; effective exchange rates; samples; independent variables; calibration; real exchange rate movements; logarithm; exchange rate movements; logarithms; exchange rate misalignments; currency boards; fixed exchange rate regime; exchange rate fluctuations; survey; exchange rate behavior; real exchange rate fluctuations; real exchange rate behavior; exchange rate regimes; foreign exchange; fixed exchange rate regimes; real exchange rate path; equations; currency appreciation; exchange rate regime; mean group estimator; exchange rate path;

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    References

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    1. International Monetary Fund, 2001. "Interpreting Real Exchange Rate Movements in Transition Countries," IMF Working Papers 01/56, International Monetary Fund.
    2. Fischer, Christoph, 2002. "Real currency appreciation in accession countries: Balassa-Samuelson and investment demand," Discussion Paper Series 1: Economic Studies 2002,19, Deutsche Bundesbank, Research Centre.
    3. Ray Barrell & Dawn Holland & Katerina Smidkova, 2003. "Estimates of Fundamental Real Echange Rates for the Five EU Pre- Accession Countries," Macroeconomics 0303016, EconWPA.
    4. Edwards, Sebastian, 1988. "Real and monetary determinants of real exchange rate behavior: Theory and evidence from developing countries," Journal of Development Economics, Elsevier, vol. 29(3), pages 311-341, November.
    5. Jörg Rahn, 2003. "Bilateral Equilibrium Exchange Rates of the EU Accession Countries against the Euro," Quantitative Macroeconomics Working Papers 20306, Hamburg University, Department of Economics.
    6. Frait , Jan & Komárek, Luboš, 2001. "REAL Exchange rate trends in transitional countries," The Warwick Economics Research Paper Series (TWERPS) 596, University of Warwick, Department of Economics.
    7. Frederic S. Mishkin, 2000. "International Experiences with Different Monetary Policy Regimes," NBER Working Papers 7044, National Bureau of Economic Research, Inc.
    8. Ronald MacDonald, 1997. "What Determines Real Exchange Rates? The Long and Short of it," IMF Working Papers 97/21, International Monetary Fund.
    9. Dibooglu, Selahattin & Kutan, Ali M., 2000. "Sources of real exchange rate fluctuations in transition economies: The case of Ploand and Hungary," ZEI Working Papers B 14-2000, ZEI - Center for European Integration Studies, University of Bonn.
    10. Paul Hallwood & Ronald MacDonald, 2008. "International Money and Finance," Working papers 2008-02, University of Connecticut, Department of Economics.
    11. Nikolay Nenovsky & Kalina Dimitrova, 2002. "Dual Inflation Under the Currency Board: The Challenges of Bulgarian EU Accession," William Davidson Institute Working Papers Series 487, William Davidson Institute at the University of Michigan.
    12. Tarhan Feyzioglu, 1997. "Estimating the Equilibrium Real Exchange Rate," IMF Working Papers 97/109, International Monetary Fund.
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    Citations

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    Cited by:
    1. Égert, Balázs, 2005. "Equilibrium exchange rates in Southeastern Europe, Russia, Ukraine and Turkey: Healthy or (Dutch) diseased?," BOFIT Discussion Papers 3/2005, Bank of Finland, Institute for Economies in Transition.
    2. Sossounov, Kirill & Ushakov, Nikolay, 2009. "Determination of the real exchange rate of rouble and assessment of long-rum policy of real exchange rate targeting," MPRA Paper 18549, University Library of Munich, Germany.
    3. Sosunov, K. & Ushakov, N., 2009. "Determination of the Real Exchange Rate of the Ruble and Assessment of Long-Run Policy of Real Exchange Rate Targeting," Journal of the New Economic Association, New Economic Association, issue 3-4, pages 97-121.
    4. Jesus Crespo Cuaresma & Jarko Fidrmuc & Maria Antoinette Silgoner, 2004. "Exchange Rate Developments and Fundamentals in Four EU Accession and Candidate Countries: Bulgaria, Croatia, Romania and Turkey," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 119-137.
    5. Boileau Loko & Anita Tuladhar, 2005. "Labor Productivity and Real Exchange Rate," IMF Working Papers 05/113, International Monetary Fund.
    6. Michael Frenkel & Isabell Koske, 2012. "Are the Real Exchange Rates of the New EU Member Countries in Line with Fundamentals? – Implications of the NATREX Approach," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 232(2), pages 129-145, March.
    7. Jerome L. Stein, 2005. "The Transition Economies: A NATREX Evaluation of Research," CESifo Working Paper Series 1449, CESifo Group Munich.

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