IDEAS home Printed from https://ideas.repec.org/p/mnb/backgr/2003-2.html
   My bibliography  Save this paper

Analysis of large real exchange rate appreciation episodes

Author

Listed:
  • Zsolt Darvas

    (Magyar Nemzeti Bank (at the time of writing the study))

Abstract

In the past three decades several countries of the world have experienced fast and large real exchange rate appreciation, similarly to the recent Hungarian experience. This paper studies macroeconomic policies and outcomes during and after large real exchange rate appreciations. The two main lessons of the paper stresses the importance of the equilibrium real exchange rate and of macroeconomic policies. First, the magnitude of the appreciation itself is not informative to the possible consequences as the relation the to equilibrium real rate matters. Second, macroeconomic policies have a determinant effect on outcomes. For example, in those floating exchange rate regimes when the real exchange rate appreciation proved to be transitory but lead to a permanent reduction of inflation and the external balance did not deteriorate during the appreciation and the output loss was less pronounced than in many exchange-rate based stabilizations, fiscal policies tightened during the appreciation period and nominal wage growth declined parallel with falling inflation.

Suggested Citation

  • Zsolt Darvas, 2003. "Analysis of large real exchange rate appreciation episodes," MNB Background Studies (discontinued) 2003/2, Magyar Nemzeti Bank (Central Bank of Hungary).
  • Handle: RePEc:mnb:backgr:2003/2
    as

    Download full text from publisher

    File URL: http://www.mnb.hu/letoltes/bs2003-2.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gorton, Matthew & Davidova, Sophia & Banse, Martin & Bailey, Alistair, 2005. "A magyar mezőgazdaság nemzetközi versenyképessége - múltbeli teljesítmény és jövőkép [International competitiveness of Hungarian agriculture: past performance and future projections]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 66-80.
    2. Magas, István, 2011. "Financial liberalisation – The dilemmas of national adaptation," Public Finance Quarterly, Corvinus University of Budapest, vol. 56(2), pages 214-240.

    More about this item

    Keywords

    real exchange rate; macroeconomic policy.;

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F30 - International Economics - - International Finance - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mnb:backgr:2003/2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Maja Bajcsy (email available below). General contact details of provider: https://edirc.repec.org/data/mnbgvhu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.