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Equilibrium Real Exchange Rate Assessment of the Serbian Dinar: The MB approach


  • Brankica Pažun

    () (Alfa University, Faculty of Engineering Management, Belgrade, Serbia)

  • Zlatko Langović

    (Megatrend University, Faculty of Business Studies, Belgrade, Serbia.)

  • Ana Langovic Milićević

    (University of Kragujevac, Faculty of Hotel Management and Tourism, Vrnjacka Banja, Serbia.)


This paper attempts to empirically estimate the equilibrium exchange rate level of the Serbian dinar. For that purpose, the macroeconomic balance approach (MB) is used, developed by the IMF’s Consultative Group on Exchange Rate Issues (CGER). The research was made by using panel data series. The testing of regression parameters variability was performed with the F test. The normal distribution assumptions were met. Current account norm was evaluated based on estimated coefficients in the model and projected values of the independent variables, and further, based on import and export elasticities, the level of exchange rate which returns current account into its equilibrium point was calculated. The results showed the dinar’s overvaluation over medium term, under unchanged economic policy.

Suggested Citation

  • Brankica Pažun & Zlatko Langović & Ana Langovic Milićević, 2016. "Equilibrium Real Exchange Rate Assessment of the Serbian Dinar: The MB approach," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 76-87, March.
  • Handle: RePEc:rjr:romjef:v::y:2016:i:1:p:76-87

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    References listed on IDEAS

    1. Viktors Ajevskis & Ramune Rimgailaite & Uldis Rutkaste & Olegs Tkacevs, 2012. "The Assesment of Equilibrium Real Echange Rate of Latvia," Working Papers 2012/04, Latvijas Banka.
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    6. Reza Siregar, 2011. "The Concepts of Equilibrium Exchange Rate: A Survey of Literature," Staff Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, number sp81, January.
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    More about this item


    equilibrium exchange rate; REER; current account norm; assessment; Serbia; panel estimations;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics


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