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Sustainable Real Exchange Rates in the New Eu Member States

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  • Katerina Smídková
  • Jan Babecky
  • Ales Bulir

Abstract

The Great Recession affected export and import patterns in our sample countries, and these changes, coupled with a more volatile external environment, have 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 are expected to continue to experience appreciation during 2010-2014, several currencies are likely to require real depreciation to maintain sustainable net external debt. Our estimates point to somewhat larger disequilibria than those of IMF country teams, however, any estimates of equilibrium exchange rates are subject to sizable uncertainty.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 10/198.

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Length: 25
Date of creation: 01 Aug 2010
Date of revision:
Handle: RePEc:imf:imfwpa:10/198

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Related research

Keywords: Foreign direct investment; Bilateral trade; Economic models; Economic recession; Exchange rate regimes; Price elasticity; Real effective exchange rates; fdi; exchange rate; real exchange rate; exchange rates; real exchange rates; direct investment; net foreign assets; foreign assets; effective exchange rate; real effective exchange rate; exchange rate misalignments; real exchange rate misalignment; exchange rate misalignment; real exchange rate misalignments; international trade; effective exchange rates; nominal exchange rate; real exchange rate appreciation; foreign currency; current account balance; floating exchange rates; flexible exchange rates; exchange rate path; exchange rate appreciation;

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References

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  1. Andrei A. Levchenko & Logan T. Lewis & Linda L. Tesar, 2010. "The Collapse of International Trade During the 2008-2009 Crisis: In Search of the Smoking Gun," NBER Working Papers 16006, National Bureau of Economic Research, Inc.
  2. Fic, Tatiana & Barrell, Ray & Holland, Dawn, 2008. "Entry rates and the risks of misalignment in the EU8," Journal of Policy Modeling, Elsevier, Elsevier, vol. 30(5), pages 761-774.
  3. Rebecca L Driver & Peter F Westaway, 2005. "Concepts of equilibrium exchange rates," Bank of England working papers, Bank of England 248, Bank of England.
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Cited by:
  1. 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, Czech National Bank, Research Department 2011/10, Czech National Bank, Research Department.
  2. Iršová, Zuzana & Havránek, Tomáš, 2013. "Determinants of Horizontal Spillovers from FDI: Evidence from a Large Meta-Analysis," World Development, Elsevier, Elsevier, vol. 42(C), pages 1-15.
  3. Sophocles Vogiazas & Constantinos Alexiou, 2013. "Liquidity And The Business Cycle: Empirical Evidence From The Greek Banking Sector," Economic Annals, Faculty of Economics, University of Belgrade, vol. 58(199), pages 109-126, October -.
  4. Lucian Claudiu ANGHEL & Florina PINZARU & Mihaela DINU & Laurentiu-Mihai TREAPAT, 2014. "Fixing the Central Parity and the Evolution of the Currency within the Exchange Rate Mechanism II in the Countries that Joined the Euro Zone," Management Dynamics in the Knowledge Economy Journal, College of Management, National University of Political Studies and Public Administration, College of Management, National University of Political Studies and Public Administration, vol. 2(4), pages 21-40, April.

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