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Estimating Equilibrium Exchange Rates for Armenia and Georgia

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  • Shuang Ding
  • Omar Al Shehabi

Abstract

The significant real exchange rate appreciation in Armenia and Georgia since 2003, coupled with persistent current account deficits, raises the question of whether real exchange rates have become overvalued. This paper seeks to identify possible exchange rate misalignment by applying the behavioral equilibrium exchange rate approach, complemented by an analysis of the traditional competitiveness indicators. The results indicate an undervaluation of the Armenian dram and no significant misalignment of the Georgian lari in 2006.

Suggested Citation

  • Shuang Ding & Omar Al Shehabi, 2008. "Estimating Equilibrium Exchange Rates for Armenia and Georgia," IMF Working Papers 2008/110, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2008/110
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    Cited by:

    1. Fakhri Hasanov, 2010. "The Impact of Real Oil Price on Real Effective Exchange Rate: The Case of Azerbaijan," Discussion Papers of DIW Berlin 1041, DIW Berlin, German Institute for Economic Research.
    2. Ho-don Yan & Cheng-lang Yang, 2012. "Does an Undervalued Currency Merit Economic Growth? – Evidence from Taiwan," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 59(1), pages 37-57, March.
    3. Rimgailaite, Ramune, 2012. "Exchange rate modelling for Lithuania and Switzerland," MPRA Paper 43451, University Library of Munich, Germany.
    4. Hasanov, Fakhri, 2009. "Analyzing price level in a booming economy: the case of Azerbaijan," MPRA Paper 29555, University Library of Munich, Germany.
    5. Gan, Christopher & Ward, Bert & Ting, Su Ting & Cohen, David A., 2013. "An empirical analysis of China's equilibrium exchange rate: A co-integration approach," Journal of Asian Economics, Elsevier, vol. 29(C), pages 33-44.
    6. Dosse Toulaboe, 2017. "Real exchange rate misalignment of Asian currencies," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 31(1), pages 39-52, May.
    7. Brixiova Zuzana & Egert Balazs & Essid Thouraya Hadj Amor, 2014. "The Real Exchange Rate and External Competitiveness in Egypt, Morocco and Tunisia," Review of Middle East Economics and Finance, De Gruyter, vol. 10(1), pages 1-27, April.
    8. Ho-Don Yan & Li-Ju Chen & Yi-Heng Tseng, 2014. "Capital Inflow, Foreign Exchange Intervention, and Currency Misalignment in Emerging Market Countries," China Economic Policy Review (CEPR), World Scientific Publishing Co. Pte. Ltd., vol. 3(02), pages 1-30.
    9. Ahmed Derbali, 2021. "The misalignment of real effective exchange rate: Evidence from Tunisia," IHEID Working Papers 04-2021, Economics Section, The Graduate Institute of International Studies.
    10. Hassan Suleiman & Zahid Muhammad, 2011. "The real exchange rate of an oil exporting economy: Empirical evidence from Nigeria," FIW Working Paper series 072, FIW.
    11. Zouhaier Hadhek & Hniya Sakli & Tahar Lassoued, 2019. "The Variability of the Tunisian Real Exchange Rate," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(1), pages 115-128, January.
    12. Fakhri, Hasanov & Khudayar, Hasanli, 2011. "Why had the Money Market Approach been irrelevant in explaining inflation in Azerbaijan during the rapid economic growth period?," MPRA Paper 29559, University Library of Munich, Germany.
    13. Volkhart Vincentz, 2008. "Trade Policy and Georgian Exports," Working Papers 272, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).
    14. Zuzana Brixiova & Balázs Égert & Thouraya Hadj Amor Essid, 2013. "Working Paper 187 - The Real Exchange Rate and External Competitiveness in Egypt, Morocco and Tunisia," Working Paper Series 991, African Development Bank.
    15. Tonci Svilokos & Meri Suman Tolic, 2014. "Does Misaligned Currency Affect Economic Growth? – Evidence from Croatia," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 16(2), pages 29-58, December.

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    Keywords

    WP; Armenia; Georgia; appreciation;
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