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The Assesment of Equilibrium Real Echange Rate of Latvia

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  • Viktors Ajevskis
  • Ramune Rimgailaite
  • Uldis Rutkaste
  • Olegs Tkacevs

Abstract

The aim of this study is to estimate the equilibrium REER of Latvia, which was done by using different methodologies, including IMF CGER approach, and the NATREX and SVAR models. The IMF methodology implies the application of three different methods: the macroeconomic balance method, the external sustainability method and the reduced-form equilibrium real exchange rate method. The results of all approaches used in this study indicate that the real exchange rate of Latvia, after appreciation during the boom years and subsequent adjustment afterwards, remained close to its equilibrium level at the end of the sample period, i.e. at end-2010.

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Bibliographic Info

Paper provided by Latvijas Banka in its series Working Papers with number 2012/04.

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Date of creation: 03 Sep 2012
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Handle: RePEc:ltv:wpaper:201204

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Keywords: equilibrium real exchange rate; BEER; macroeconomic balance; external sustainability; NATREX; SVAR; Latvia;

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