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Real Exchange Rate Adjustment In European Transition Countries

  • Maican, Florin G.

    ()

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Sweeney, Richard J.

    ()

    (McDonough School of Business, Georgetown University)

This paper presents unit-root test results for real exchange rates in ten Central and Eastern European transition countries during 1993:01-2003:12. Because of the shift from controlled to market economies and the accompanying crises, failed policy regimes and changes in exchange rate regimes, appropriate tests in transition countries require allowing for both structural changes and outliers. In both single-equation tests and panel tests with SUR techniques, the data reject the unit-root null for the CEE countries. Accounting for structural breaks and outliers gives much faster mean-reversion speeds than otherwise.

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File URL: http://hdl.handle.net/2077/2715
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Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 202.

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Length: 30 pages
Date of creation: 14 Feb 2006
Date of revision:
Handle: RePEc:hhs:gunwpe:0202
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Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden

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