Equilibrium Exchange Rates in Transition Economies

Author/Editor:

Lionel Halpern ; Charles Wyplosz

Publication Date:

November 1, 1996

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:

A stylized fact of the transition process is an early profound exchange rate depreciation followed by continuing real appreciation. Absent historical reference points, it is difficult to judge whether the real appreciation is threatening competitiveness. This paper interprets the stylized facts and offers estimates of the equilibrium real exchange rate based on an international comparison of dollar wages and on a study of the dynamics of real exchange rates in several transition economies. The results suggest that the process of real appreciation is a combination of a return to equilibrium following the early overshooting and equilibrium appreciation.

Series:

Working Paper No. 96/125

Notes:

Also published in Staff Papers, Vol. 44, No. 4, December 1997.

English

Publication Date:

November 1, 1996

ISBN/ISSN:

9781451854794/1018-5941

Stock No:

WPIEA1251996

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

40

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