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In Search of a Dramatic Equilibrium

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Author Info

  • Nienke Oomes
  • Vahram Stepanyan
  • Gohar Minasyan
  • Ara Stepanyan
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    Abstract

    This papers estimates the equilibrium exchange rate for Armenia using three different approaches: the purchasing power parity (PPP) approach, the behavioral equilibrium exchange rate (BEER) approach, and the external sustainability (ES) approach. All three approaches suggest that the dram was overvalued by about 20–30 percent prior to the devaluation of the dram in March 2009.

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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=22783
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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 09/49.

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    Length: 22
    Date of creation: 01 Mar 2009
    Date of revision:
    Handle: RePEc:imf:imfwpa:09/49

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    Related research

    Keywords: Exchange rate appreciation; Purchasing power parity; Fiscal sustainability; Economic models; exchange rate; real exchange rate; current account balance; equilibrium exchange rate; exchange rate misalignment; real exchange rate misalignment; terms of trade; effective exchange rate; real effective exchange rate; exchange rates; trade partners; trade partner; foreign exchange; export prices; exchange rate adjustment; nominal exchange rate; exchange rate regime; export share; external trade; exchange rate movements; transition economies; partner countries; nontradable goods; global competitiveness; political economy; real exchange rate movements; global supply; exchange rate level; import prices; transition countries; external position; de facto exchange rate regime; real exchange rates; output growth; real exchange rate dynamics; fixed exchange rate; balance of payments; open economy; real exchange rate appreciation; exchange rate dynamics; trade flows; current account deficit; neighboring countries;

    This paper has been announced in the following NEP Reports:

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Balázs Egert, 2002. "Investigating the Balassa-Samuelson hypothesis in the transition: Do we understand what we see? A panel study," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(2), pages 273-309, July.
    2. Jose De Gregorio & Alberto Giovannini & Holger C. Wolf, 1993. "International Evidence on Tradables and Nontradables Inflation," Working Papers 93-17, New York University, Leonard N. Stern School of Business, Department of Economics.
    3. Philip R. Lane & Gian Maria Milesi-Ferretti, 2002. "Long-Term Capital Movements," NBER Chapters, in: NBER Macroeconomics Annual 2001, Volume 16, pages 73-136 National Bureau of Economic Research, Inc.
    4. Maeso-Fernandez, Francisco & Osbat, Chiara & Schnatz, Bernd, 2005. "Pitfalls in estimating equilibrium exchange rates for transition economies," Economic Systems, Elsevier, vol. 29(2), pages 130-143, June.
    5. Jeffrey Frankel, 2005. "On the Renminbi: The Choice between Adjustment under a Fixed Exchange Rate and Adjustment under a Flexible Rate," NBER Working Papers 11274, National Bureau of Economic Research, Inc.
    6. Coricelli, Fabrizio & Jazbec, Bostjan, 2001. "Real Exchange Rate Dynamics in Transition Economies," CEPR Discussion Papers 2869, C.E.P.R. Discussion Papers.
    7. Kenneth Rogoff, 1996. "The Purchasing Power Parity Puzzle," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 647-668, June.
    8. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72, pages 584.
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