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Competitiveness in Bulgaria: An Assessment of the Real Effective Exchange Rate

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  • Dimitar Chobanov
  • Ms. Piritta Sorsa

Abstract

This paper presents an empirical analysis of the medium- and long-term determinants of the real (effective) exchange rate (RER) of the Bulgarian lev using elements from the natural real exchange rate (NATREX) and the behavioral equilibrium exchange rate (BEER) approaches. The results indicate that the RER is driven by fundamentals, including labor productivity, terms of trade, world real interest rates, gross savings, and foreign direct investment. The model also shows that there is no significant misalignment of the Bulgarian lev.

Suggested Citation

  • Dimitar Chobanov & Ms. Piritta Sorsa, 2004. "Competitiveness in Bulgaria: An Assessment of the Real Effective Exchange Rate," IMF Working Papers 2004/037, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:2004/037
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    References listed on IDEAS

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    Cited by:

    1. Mr. Boileau Loko & Ms. Anita Tuladhar, 2005. "Labor Productivity and Real Exchange Rate: The Balassa-Samuelson Disconnect in the former Yugoslav Republic of Macedonia," IMF Working Papers 2005/113, International Monetary Fund.
    2. Frenkel Michael & Koske Isabell, 2012. "Are the Real Exchange Rates of the New EU Member Countries in Line with Fundamentals? – Implications of the NATREX Approach," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 232(2), pages 129-145, April.
    3. Egert, Balazs, 2005. "Equilibrium exchange rates in South Eastern Europe, Russia, Ukraine and Turkey: Healthy or (Dutch) diseased?," Economic Systems, Elsevier, vol. 29(2), pages 205-241, June.
    4. repec:onb:oenbfi:y:2004:i:2:b:6 is not listed on IDEAS
    5. Sosunov, K. & Ushakov, N., 2009. "Determination of the Real Exchange Rate of the Ruble and Assessment of Long-Run Policy of Real Exchange Rate Targeting," Journal of the New Economic Association, New Economic Association, issue 3-4, pages 97-121.
    6. Jerome L. Stein, 2005. "The Transition Economies: A NATREX Evaluation of Research," CESifo Working Paper Series 1449, CESifo.
    7. Balázs Égert, 2004. "Equilibrium Exchange Rates in Southeastern Europe, Russia, Ukraine and Turkey: Healthy or (Dutch) Diseased?," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 138-181.

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