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Do Fundamentals Explain the Behaviour of the Swedish Real Effective Exchange Rate?

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  • Kristian Nilsson

Abstract

This study examines the long-run relationship between the real effective exchange rate and its fundamental determinants, and derives a real effective equilibrium exchange rate for the Swedish krona. Our results indicate that the krona was severely overvalued in late 1992, when the fixed exchange rate regime was abandoned. By the end of 2000 the krona was undervalued by approximately 5 percent, given the prevailing economic conditions. Arithmetic examples of suitable SEK/EUR conversion rates are calculated under various assumptions to provide a guideline if Sweden were to adopt the euro in the future. Copyright The editors of the "Scandinavian Journal of Economics", 2004 .

Suggested Citation

  • Kristian Nilsson, 2004. "Do Fundamentals Explain the Behaviour of the Swedish Real Effective Exchange Rate?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(4), pages 603-622, December.
  • Handle: RePEc:bla:scandj:v:106:y:2004:i:4:p:603-622
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    Citations

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    Cited by:

    1. Sellin, Peter, 2007. "Using a New Open Economy Macroeconomics model to make real nominal exchange rate forecasts," Working Paper Series 213, Sveriges Riksbank (Central Bank of Sweden).
    2. Bergvall, Anders & Forsfält, Tomas & Hjelm, Göran & Nilsson, Jonny & Vartiainen, Juhana, 2007. "KIMOD 1.0 Documentation of NIER´s Dynamic Macroeconomic General Equilibrium Model of the Swedish Economy," Working Papers 100, National Institute of Economic Research.
    3. Kiptui, Moses C. & Ndirangu, Lydia, 2015. "Determinants of Equilibrium Real Exchange Rate and its Misalignment in Kenya: A Behavioral Equilibrium Exchange Rate Approach," MPRA Paper 70542, University Library of Munich, Germany, revised 06 Apr 2016.
    4. Waheed, Muhammad, 2009. "Impact of real and nominal factors on long run equilibrium in Real Effective Exchange Rate (REER) in Pakistan," MPRA Paper 33169, University Library of Munich, Germany, revised Sep 2010.
    5. Emerson Fernandes Marçal & Priscila Fernandes Ribeiro, 2011. "Levado pelos Fundamentos? Estimando o Desalinhamento Cambial Norte-Americano a partir de Técnicas de Cointegração," Discussion Papers 1674, Instituto de Pesquisa Econômica Aplicada - IPEA.
    6. Oliver Hossfeld, 2010. "Equilibrium Real Effective Exchange Rates and Real Exchange Rate Misalignments: Time Series vs. Panel Estimates," Working Papers 2010.3, International Network for Economic Research - INFER.
    7. Coppola,Andrea & Lagerborg,Andresa & Mustafaoglu,Zafer, 2016. "Estimating an equilibrium exchange rate for the Argentine Peso," Policy Research Working Paper Series 7682, The World Bank.
    8. repec:bla:reviec:v:25:y:2017:i:5:p:1078-1104 is not listed on IDEAS
    9. Konrad Adler & Christian Grisse, 2017. "Thousands of BEERs: Take your pick," Review of International Economics, Wiley Blackwell, vol. 25(5), pages 1078-1104, November.
    10. Marçal, Emerson Fernandes, 2013. "Exchange rate misalignments, interdependence, crises, and currency wars: an empirical assessment," Textos para discussão 348, FGV/EESP - Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
    11. Emerson Fernandes Marçal & Fernando Barbi, 2010. "“Quo Vadis Real? Estimating the Brazilian Real Exchange Rate Misalignment in Vector Error Correction Model with Structural Change”," Working Papers 10-2010, Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto.

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