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Dluhově přizpůsobený reálný devizový kurz české koruny
[Debt adjusted real exchange rate of the czech currency]

Author

Listed:
  • Jan Frait
  • Luboš Komárek

Abstract

The paper aims at enriching current discussions about the equilibrium exchange rate level for the Czech currency, and generally for transition economies. The main idea of the paper is to introduce one of the newly emerged conceptions of real exchange rate which can indicate potential overvaluation or undervaluation of the exchange rate. The conception which is called DARER (Debt Adjusted Real Exchange Rate) takes into account the effects of current account deficits and of foreign debt on the equilibrium price level and thus real exchange rate. The importance of this particular conception is given by the fact many of the transitional countries finance their long-term deficits on current account by capital inflows which sometimes contributes to the exchange rate misalignments. DARER can send warning singals indicating that the current level of the real exchange rate can be no longer sustained.

Suggested Citation

  • Jan Frait & Luboš Komárek, 1999. "Dluhově přizpůsobený reálný devizový kurz české koruny
    [Debt adjusted real exchange rate of the czech currency]
    ," Politická ekonomie, University of Economics, Prague, vol. 1999(1).
  • Handle: RePEc:prg:jnlpol:v:1999:y:1999:i:1:id:2
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    References listed on IDEAS

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    1. Randy Becker & Vernon Henderson, 2000. "Effects of Air Quality Regulations on Polluting Industries," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 379-421, April.
    2. Gene M. Grossman & Alan B. Krueger, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, Oxford University Press, vol. 110(2), pages 353-377.
    3. William D. Nordhaus, 1973. "The Allocation of Energy Resources," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, pages 529-576.
    4. John Martin & Doug Ramsey, 2009. "The Economics of Wind Energy," Journal of Applied Corporate Finance, Morgan Stanley, vol. 21(2), pages 100-109.
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