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Equilibrium Exchange Rates in Transition Economies

Author

Listed:
  • László Halpern

    (International Monetary Fund)

  • Charles Wyplosz

    (International Monetary Fund)

Abstract

Exchange rates in transition economies undergo early depreciation followed by continuing real appreciation. The paper documents and interprets this stylized fact. It provides estimates of the real equilibrium exchange rate based on a sample of 80 countries, and estimates well the dynamics of the real exchange rate in the early transition phase. The results suggest that the continuing real appreciation corresponds to a combination of a return to equilibrium following an initial overshooting, and of real equilibrium appreciation.

Suggested Citation

  • László Halpern & Charles Wyplosz, 1997. "Equilibrium Exchange Rates in Transition Economies," IMF Staff Papers, Palgrave Macmillan, vol. 44(4), pages 430-461, December.
  • Handle: RePEc:pal:imfstp:v:44:y:1997:i:4:p:430-461
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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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