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Bilateral equilibrium exchange rates of EU accession countries against the euro

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  • Rahn, Jörg

Abstract

We apply BEER and PEER approaches to calculate real equilibrium exchange rates for five EU accession countries in central and east Europe.Bilateral nominal equilibrium exchange rates against the euro are obtained through algebraic transformation of the results. Panel cointegration techniques are used to check the adequacy of the empirical model.The results reveal substantial overvaluations of the real exchange rate in several EU accession countries. Overvaluation is even higher when these exchange rates are expressed in nominal terms against the euro. Keywords: real exchange rates, equilibrium exchange rates, transition economies, panel cointegration JEL Classification: F31, F41, C23

Suggested Citation

  • Rahn, Jörg, 2003. "Bilateral equilibrium exchange rates of EU accession countries against the euro," BOFIT Discussion Papers 11/2003, Bank of Finland, Institute for Economies in Transition.
  • Handle: RePEc:bof:bofitp:2003_011
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    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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