Competitiveness and the Equilibrium Exchange Rate in Costa Rica

Author/Editor:

Claudio A Paiva

Publication Date:

February 1, 2001

Electronic Access:

Free Full Text (PDF file size is 1238 KB).Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper evaluates several indicators of external vulnerability and estimates the equilibrium real exchange rate for Costa Rica. While current indicators are mostly positive, declining market shares of domestic exports, the expected decline in foreign direct investment, and the desirability of strengthening the reserve position recommend an improvement in the current account. Costa Rica’s equilibrium real exchange rate is then estimated using the CGER and the FEER methodologies. The overall conclusion is that while there are no signs of serious external vulnerability, the real exchange rate appears to be somewhat overvalued, a situation that would be best addressed through increased fiscal discipline.

Series:

Working Paper No. 01/23

Subject:

English

Publication Date:

February 1, 2001

ISBN/ISSN:

9781451844047/1018-5941

Stock No:

WPIEA0232001

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

29

Please address any questions about this title to publications@imf.org