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Devaluation And Output In Five Transition Economies: A Panel Cointegration Approach Of Poland, Hungary, Czech Republic, Slovakia And Romania, 1993-2000

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  • MITEZA, Ilir

Abstract

This paper assesses the impact of devaluations on aggregate output for a group of five transition economies during the period 1993-2000. An application of panel unit root tests and panel cointegration establishes the presence of a long run relationship between real output, real exchange rates, real money and real wages, while the estimation of the long run relationship reveals that devaluations are contractionary in the long run. This finding is in contrast with a large part of the literature, which discern no long run effect on output.

Suggested Citation

  • MITEZA, Ilir, 2006. "Devaluation And Output In Five Transition Economies: A Panel Cointegration Approach Of Poland, Hungary, Czech Republic, Slovakia And Romania, 1993-2000," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 6(1).
  • Handle: RePEc:eaa:aeinde:v:6:y:2006:i:1_6
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    References listed on IDEAS

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    5. Krugman, Paul & Taylor, Lance, 1978. "Contractionary effects of devaluation," Journal of International Economics, Elsevier, vol. 8(3), pages 445-456, August.
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    7. Edward, Sebastian, 1986. "Are Devaluations Contractionary?," The Review of Economics and Statistics, MIT Press, vol. 68(3), pages 501-508, August.
    8. Pedroni, Peter, 1999. " Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-670, Special I.
    9. Gylfason, Thorvaldur & Radetzki, Marian, 1991. "Does Devaluation Make Sense in the Least Developed Countries?," Economic Development and Cultural Change, University of Chicago Press, vol. 40(1), pages 1-25, October.
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    12. Steven B. Kamin & Marc Klau, 1997. "Some multi-country evidence on the effects of real exchange rates on output," BIS Working Papers 48, Bank for International Settlements.
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    Cited by:

    1. Manuel CANTAVELLA-JORDA & Sheila Amin GUTIERREZ DE PIÑERES, 2012. "A Cross-national Panel Study of Devaluations on Disaggregated Export Sectors: A Case for Sector Specific Policies," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 12(2).
    2. Yu Hsing, 2016. "Impacts of Government Debt, the Exchange Rate and Other Macroeconomic Variables on Aggregate Output in Croatia," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 14(3 (Fall)), pages 223-231.
    3. Muhammad Shahbaz & Faridul Islam & Naveed Aamir, 2012. "Is devaluation contractionary? Empirical evidence for Pakistan," Economic Change and Restructuring, Springer, vol. 45(4), pages 299-316, November.
    4. HSING, Yu, 2016. "Is Real Depreciation Expansionary? The Case Of The Slovak Republic," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 16(2), pages 55-62.
    5. Abdulkadir Abdulrashid Rafindadi & Zarinah Yusof, 2014. "An Econometric Estimation and Prediction of the Effects of Nominal Devaluation on Real Devaluation: Does the Marshal-Lerner (M-L) Assumptions Fits in Nigeria?," International Journal of Economics and Financial Issues, Econjournals, vol. 4(4), pages 819-835.

    More about this item

    Keywords

    Exchange Rates; Devaluation; Output; Panel Cointegration; Transition Economies; EU Accession;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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