## 1. Armenia: Estimated Coefficients for Several Lag Specifications

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### Econometric approach and data
- Framework:
  - Behavioral equilibrium exchange rate (BEER) approach: estimate long-run relationship between real exchange rate (REER) and fundamentals; compute equilibrium REER (ERER) and misalignment.
  - Techniques used: bound testing approach (Pesaran, Shin and Smith, 2001), ARDL (Pesaran and Shin, 1999), and Johansen cointegration/VECM for robustness checks.
- Data and sample:
  - Armenia sample: 1995Q1 to 2006Q4, 48 observations.
  - Georgia samples: 1997Q3 to 2006Q4 (38 observations) using CPI/PPI productivity proxy; 1995Q1 to 2006Q4 (48 observations) using GDPC productivity proxy.
  - Maximum of four explanatory variables per regression given small sample; exhaustive combinations explored to satisfy criteria: significant cointegration, significant long-run coefficients, and expected signs.
- Candidate fundamentals (seven):
  - Productivity differential: CPI/PPI and GDPC.
  - Terms of Trade (TOT).
  - Government consumption relative to trading partners (GOV).
  - Investment relative to trading partners (INV).
  - Net foreign assets as share of GDP (NFA).
  - Openness (OPEN = exports + imports to GDP).

### Armenia — estimation results (preferred specification and robustness)
- Preferred ARDL lag specification: (2,2,2,2,2).
- Reported ARDL long-run relationship (as presented in source):
  - NFAOPEN TOT GOV REER 05.036.017.247.0−−+=
    - t statistics in brackets: (2.67***) (3.40***) (2.39**) (-2.68***)
- Error-correction and adjustment:
  - Error-correction term: -0.62 with standard error 0.11, significant at 1 percent.
  - Error-correction coefficients observed across specifications include: -0.52 (0.10), -0.62 (0.11), -0.56 (0.11), -0.56 (0.10).
- Johansen/VECM robustness (alternative estimates reported):
  - Johansen long-run coefficients (reported alternative):
    - 0.463.150.130.08REER GOV TOT OPEN NFA = + − −
      - standard errors: (0.10) (0.30) (0.09) (0.009)
  - VECM adjustment parameter: -0.29 with standard error 0.07 (negative and significant).
- Key interpretation for Armenia:
  - Terms of trade play a vital role.
  - NFA has a negative sign consistent with findings for other transition economies.
  - Preferred-results interpretation supports a rapidly appreciating equilibrium REER since 2003 relative to Georgia.

### Georgia — estimation results (preferred specification and robustness)
- Preferred ARDL lag specification reported in main text: (2,2,2,2,2) (text also notes preferred lag specification in appendix as (1,0,0,1,0) for some diagnostics).
- Reported ARDL long-run relationship (as presented in source):
  - INV OPEN GOV PPICPI REER 72.078.021.0/86.0 −−+=
    - t statistics: (2.4**) (2.1**) (-2.7***) (-2.8***)
- Error-correction and adjustment:
  - Error-correction term: -0.21 with standard error 0.10, significant at 5 percent.
  - Error-correction coefficients observed across specifications include: -0.21 (0.10), -0.20 (0.11), -0.29 (0.12), -0.28 (0.09).
- Johansen approach results:
  - Evidence for long-run cointegrating relationship at 5 percent (trace and maximum eigenvalue tests).
  - Johansen long-run coefficients reported:
    - 0.88/0.04 0.59 2.13 REER CPI PPIGOV OPEN INV = + − −
      - standard errors: (0.31) (0.09) (0.27) (0.24)
  - Notes: government consumption coefficient has high standard error; investment coefficient differs in magnitude across approaches.
- Key determinants for Georgia:
  - CPI/PPI (productivity proxy), openness, and investment are important in ERER determination.

### Misalignment and equilibrium assessments (quarterly average basis, 2006)
- Armenia:
  - Assessment: undervaluation of the dram by 14 percent in 2006 (quarterly average basis).
- Georgia:
  - Assessment: overvaluation of the lari by 2 percent in 2006 (quarterly average basis).
- Dynamics since 2003:
  - Equilibrium REER in Armenia appreciated rapidly compared with Georgia since 2003.
- Overall headline inference:
  - Results indicate recent real appreciation in both countries reflected convergence to equilibrium; 2006 assessment shows an undervaluation of the Armenian dram and no significant misalignment of the Georgian lari.

### Diagnostics, tests, and selected statistics
- Bound testing and cointegration:
  - Armenia: F and t values (in absolute terms) larger than critical value bounds → existence of long-run relationship.
  - Georgia: Johansen tests show cointegration at 5 percent.
- Johansen/VECM summary (Table highlights from source):
  - Armenia:
    - λtrace = 135.46***, λmax = 82.41***.
    - VECM adjustment parameter: -0.29*** (standard error 0.07).
  - Georgia:
    - λtrace = 79.58**, λmax = 36.58**.
    - VECM adjustment parameter: -0.03 (reported).
- Johansen estimated coefficients (selected values reported in source):
  - Armenia:
    - CPI/PPI = -0.08*** (0.009)
    - GDPC = 3.15*** (0.30)
    - NFA = 0.46*** (0.10)
    - TOT = -0.13* (0.09)
    - AIC = -14.7; SC = -13.2; Log Likelihood = 373
  - Georgia:
    - CPI/PPI = 0.88*** (0.31)
    - GDPC = 0.04 (0.09)
    - NFA = -0.59** (0.27)
    - TOT = -2.13*** (0.24)
    - AIC = -12.32; SC = -10.73; Log Likelihood = 257

### Policy implications and caveats (as reported)
- Main conclusions:
  - BEER estimates suggest Georgia’s REER in 2006 was broadly consistent with fundamentals — no serious exchange rate misalignment.
  - Armenia’s REER in 2006 was undervalued, indicating further real appreciation pressures; the sharp real appreciation of the dram in 2007 is consistent with such pressures.
  - Rapid recent REER appreciation in both countries reflected movement toward equilibrium rather than significant overvaluation.
  - Armenia’s faster REER appreciation relative to Georgia explained by faster appreciation of Armenia’s ERER supported by terms of trade and productivity improvements.
- Caveats and recommended further work:
  - Short time series and potential systematic misalignment imply single-country BEER estimates should be interpreted with caution.
  - To mitigate short-sample weaknesses: estimate equilibrium relationships within a cross-country panel framework or use out-of-sample estimations from more advanced economies.

*Source: _wp08110*

### 1. Armenia: Estimated Coefficients for Several Lag Specifications ..................................16

### 1. Armenia: Estimated Coefficients for Several Lag Specifications

### Main table of contents entries (related sections and pages)
- 1. Armenia: Estimated Coefficients for Several Lag Specifications ..................................16
- 2. Georgia: Estimated Coefficients for Several Lag Specifications ....................................16
- 3. Armenia: Long-Run Relationship Results Using the Bound Testing Approach ............17
- 4. Georgia: Long-Run Relationship Results Using the Bound Testing Approach .............17
- 5. Armenia and Georgia: Johansen Cointegration Test and VECM Results ......................17
- 6. Armenia and Georgia: Estimated Coefficients and Information Criteria Using Johansen’s Approach......................................................................................................................18

### Figures listed in the content unit
- 1. Armenia and Georgia: Real Effective Exchange Rates, 1995–2007 ................................5
- 2. Armenia and Georgia: Terms of Trade, 1995–2007 .........................................................5
- 3. Armenia and Georgia: External Current Account Balance, 1995–2007...........................6
- 4. Armenia and Georgia: Real Per-Capita GDP in Local Currencies, 1995–2007...............7
- 5. Armenia and Georgia: Industrial Unit Labor Costs, 1999–2006 ......................................7
- 6. Armenia and Georgia: Exchange Rate Misalignment, 1997–2006 ................................13
- 7. Armenia and Georgia: Equilibrium Real Exchange Rate Index, 1997–2006 .................14

### Appendix and methodological entries
- Appendix: Methodology, Data Construction, and Results ...............................................................15
  - A. Methodology and Data Construction .........................................................................15
  - B. Results ........................................................................................................................16

*Source: _wp08110 - 1. Armenia: Estimated Coefficients for Several Lag Specifications ..................................16*

### References..............................................................................................................

### _wp08110 - References

### I. Introduction
- Context:
  - Armenia and Georgia are low-income countries undergoing significant transformations following the collapse of the Soviet Union (sharp output decline in 1991–93).
  - Armenia: double-digit growth since 2002 in a relatively low-inflation environment.
  - Georgia: pickup in both economic activity and inflationary pressures since 2005.
- External inflows:
  - Large foreign exchange inflows in the form of remittances, foreign aid, and foreign direct investments have contributed to substantial appreciation of real effective exchange rates (REER).
- Research question:
  - Whether recent real appreciation represents realignment toward equilibrium or a misalignment of real exchange rates.
- Methodological focus:
  - Paper focuses on the behavioral equilibrium exchange rate (BEER) approach due to data limitations and uncertainties affecting the macroeconomic balance approach.
- Main headline result:
  - Results indicate recent real exchange rate appreciation in both countries reflected convergence to equilibrium; 2006 assessment shows an undervaluation of the Armenian dram and no significant misalignment of the Georgian lari.

### II. Stylized Facts on External Competitiveness
- REER developments:
  - Both countries experienced noticeable appreciation of the CPI-based REER since 2003.
  - Armenia: about 10 percent annually real appreciation, driven by significant nominal appreciation.
  - Georgia: about 5 percent annually real appreciation attributable to both nominal appreciation and inflation differentials.
  - Exchange rate moves coincided with large inflows (remittances and FDI).
  - Specific nominal appreciation: Armenian dram appreciated against the U.S. dollar by 46 percent from end-2003 to end-2007; Georgian lari appreciated by 23 percent during the same period.
- Terms of trade (TOT):
  - Both are metal exporters and energy importers.
  - Georgia: slight improvement in TOT as increases in international metal prices more than offset higher oil and natural gas prices.
  - Armenia: more significant improvement in TOT due to sharp increases in the price of copper while gas import price remains below regional average.
- Current account balance:
  - Both countries have registered current account deficits since 1995.
  - Armenia: increasing remittances contributed to remarkable improvement in external current account (current account deficit declined significantly over the past decade except for rebound since 2004).
  - Georgia: current account appears to be deteriorating; prospects depend on building new export base and capacity given likely loss of major export items.
  - Net foreign liabilities (authorities’ data for 2006): Armenia 24 percent of GDP; Georgia 65 percent of GDP.
- Productivity indicators:
  - Real GDP per capita increased significantly between 2003 and 2007; Armenia’s gain more pronounced (about 10 percent on an annual basis).
  - Industrial unit labor costs, 1999–2006: Armenia reduced unit labor costs by 33 percent in 3 years; Georgia increased by almost 30 percent in same period.
- Synthesis:
  - Faster appreciation of Armenian dram compared with Georgian lari is underpinned by more significant improvements in TOT, current account balance, and productivity.
  - Uncertainty remains on appropriateness of current REER levels and future movements — requires assessment of current REER relative to equilibrium.

### III. Application of the BEER
#### A. Theoretical Background
- BEER approach overview:
  - Long-run relationship between real exchange rate and explanatory variables estimated and interpreted as equilibrium relationship.
  - Three steps: cointegration estimation, compute ERER from fundamentals at a point in time, derive misalignment as difference between actual REER and equilibrium value.
- Advantages vs macroeconomic balance:
  - Not based on a specific exchange rate model; direct estimation of ERER; allows wide range of explanatory variables tailored to country.
- Drawbacks for Armenia and Georgia:
  - Assumes equilibrium relationship derivable from historical data; structural changes may cause systematic misalignment.
  - Short time series: quarterly data: 48 quarters for Armenia; 48 or 38 quarters for Georgia depending on productivity variable used.
  - Data quality issues, especially for investment and net foreign assets.

#### B. Selection of Variables
- Seven candidate fundamentals considered (selection based on importance and data availability):
  - Productivity differential (two proxies): CPI/PPI (ratio of consumer price index to producer price index relative to trading partners) and GDPC (GDP per capita relative to trading partners).
  - Terms of Trade (TOT).
  - Government consumption as percent of GDP relative to trading partners (GOV).
  - Investment as percent of GDP relative to trading partners (INV).
  - Net foreign assets as share of GDP (NFA).
  - Openness to trade (OPEN) measured as exports plus imports to GDP.
- Expected signs (theory):
  - Productivity differential: positive (Balassa-Samuelson effect).
  - TOT: positive.
  - GOV: positive (if government consumption biased to nontradables).
  - INV: ambiguous (import content vs productivity gains).
  - NFA: theoretically ambiguous; negative sign found for former Soviet economies in some studies.
  - OPEN: captures trade restrictiveness; trade protection associated with appreciated real exchange rate.

#### C. Econometric Methodology
- Econometric techniques used:
  - Bound testing approach (Pesaran, Shin and Smith, 2001) to establish long-run relationship.
  - Auto-regressive distributed lag (ARDL) approach (Pesaran and Shin, 1999) to estimate long-run coefficients.
  - Johansen cointegration test and VECM for robustness checks.
- Practical considerations:
  - Bound testing advantageous in short samples; independent of I(0)/I(1) classification.
  - Parsimonious lag structures allowed.
  - Regressions run on unfiltered (unsmoothed) data series.
  - Given small sample size, maximum of four explanatory variables used per regression; exhaustive combinations explored to meet criteria:
    1. Significant long-run cointegrating relationship (bound testing).
    2. Significant coefficients in ARDL.
    3. Coefficients with expected signs.

#### D. Estimation Results
- Armenia (sample 1995Q1 to 2006Q4, 48 observations):
  - Selected ARDL relationship (lag specification (2,2,2,2,2)):
    - NFAOPEN TOT GOV REER 05.036.017.247.0−−+=
      (t statistics in brackets as reported: (2.67***) (3.40***) (2.39**) (-2.68***) )
  - Bound testing: F and t values (in absolute terms) larger than critical value bounds → existence of long-run relationship.
  - Error-correction term: -0.62 with standard error 0.11, significant at 1 percent.
  - Johansen/VECM robustness:
    - Alternative Johansen estimate reported:
      - 0.463.150.130.08REER GOV TOT OPEN NFA = + − −
        (standard errors reported: (0.10) (0.30) (0.09) (0.009) )
    - VECM adjustment parameter: -0.29 with standard error 0.07 (negative and significant).
  - Interpretation:
    - Terms of trade play vital role; NFA has negative sign, consistent with other transition economies.
- Georgia:
  - Sample periods:
    - Using CPI/PPI productivity proxy: 1997Q3 to 2006Q4, 38 observations.
    - Using GDPC productivity proxy: 1995Q1 to 2006Q4, 48 observations.
  - Selected ARDL relationship (lag specification (2,2,2,2,2)):
    - INV OPEN GOV PPICPI REER 72.078.021.0/86.0 −−+=
      (t statistics: (2.4**) (2.1**) (-2.7***) (-2.8***) )
  - Error-correction term: -0.21 with standard error 0.10, significant at 5 percent.
  - Johansen approach results:
    - Evidence for long-run cointegrating relationship at 5 percent level (maximum and trace eigenvalue tests).
    - Johansen long-run coefficients reported:
      - 0.88/0.04 0.59 2.13 REER CPI PPIGOV OPEN INV = + − −
        (standard errors: (0.31) (0.09) (0.27) (0.24) )
    - Note: government consumption coefficient has high standard error; investment coefficient differs in magnitude across approaches.
  - Key determinants: CPI/PPI (productivity proxy), openness, and investment are important in Georgia’s ERER determination.
- Misalignment assessment for 2006 (quarterly average basis):
  - Armenia: undervaluation of the dram by 14 percent.
  - Georgia: overvaluation of the lari by 2 percent.
  - Note: assessment assumes exchange rate misalignment evens out during 1997–2006.
- Dynamics since 2003:
  - Equilibrium REER in Armenia appreciated rapidly compared with Georgia since 2003.

### IV. Conclusion
- Main conclusions:
  - BEER approach suggests Georgia’s REER in 2006 was broadly consistent with economic fundamentals — no serious exchange rate misalignment.
  - Armenia’s REER in 2006 was undervalued, indicating further real appreciation pressures in subsequent years; the sharp real appreciation of the dram in 2007 provides evidence of such pressures.
  - Rapid recent REER appreciation in both countries reflected movement toward equilibrium rather than significant overvaluation.
  - Armenia’s faster REER appreciation vs Georgia explained by faster appreciation of Armenia’s ERER, supported by terms of trade and productivity indicators.
- Caveats and recommendations for further work:
  - Short time series and potential systematic misalignment mean single-country BEER estimates should be interpreted with caution.
  - To mitigate short-sample weakness: estimate equilibrium relationships within a cross-country panel framework or use out-of-sample estimations from more advanced economies.

### Appendix. Methodology, Data Construction, and Results
#### A. Methodology and Data Construction (selected details)
- Trade weights:
  - Constant partner trade weights based on 1999–2001 averages (New2 weights); 16 trading partners for Armenia and 17 for Georgia.
- Variable definitions and sources (examples):
  - REER: ln of REER. Source: IMF EER estimates.
  - GOV: ln of government consumption ratio to GDP relative to trading partners. Seasonally adjusted. Sources: IFS, WEO, Haver Analytics and Central Bank of Iran.
  - INV: ln of investment ratio to GDP relative to trading partners. Seasonally adjusted. Sources: IFS, WEO, Haver Analytics and Central Bank of Iran.
  - TOT: ln of ratio of components-based goods export deflator to import deflator. Seasonally adjusted. Source: WEO.
  - CPI/PPI: ln of ratio of CPI to PPI relative to trading partners. Seasonally adjusted. Sources: IFS, IMF staff estimates, Haver Analytics, Central Bank of Iran.
  - GDPC: ln of real GDP per capita in U.S. dollars relative to trading partners. Seasonally adjusted. Sources: IFS, IMF staff estimates, Haver Analytics, Central Bank of Iran.
  - NFA:
    - Armenia: international investment positions (IIP) net values minus gold reserves; missing data constructed by adding current account balance to preceding period; seasonally adjusted. Source: IFS.
    - Georgia: accumulated current account balance over the sample period; seasonally adjusted. Source: IFS.
  - OPEN: ln of exports and imports as a ratio to GDP. Seasonally adjusted. Source: IFS.

#### B. Estimation Results (summarized tables & diagnostics — selected highlights)
- Armenia:
  - Preferred lag specification reported in main text: (2,2,2,2,2).
  - Error-correction coefficients observed across specifications: examples include -0.52 (0.10), -0.62 (0.11), -0.56 (0.11), -0.56 (0.10).
  - Bound testing and LM tests reported across lag lengths with associated p-values and critical value bounds (see Tables 1 and 3 in source for full details).
- Georgia:
  - Preferred lag specification reported in main text: (1,0,0,1,0).
  - Error-correction coefficients observed across specifications: examples include -0.21 (0.10), -0.20 (0.11), -0.29 (0.12), -0.28 (0.09).
  - Bound testing and LM tests reported across lag lengths with associated p-values and critical value bounds (see Tables 2 and 4 in source for full details).
- Johansen/VECM summary (Table 5 highlights):
  - Armenia:
    - λtrace and λmax statistics significant at 1 percent: λtrace = 135.46***, λmax = 82.41***.
    - VECM adjustment parameter: -0.29*** (standard error 0.07).
  - Georgia:
    - λtrace and λmax statistics significant at 5 percent: λtrace = 79.58**, λmax = 36.58**.
    - VECM adjustment parameter: -0.03 (reported).
- Johansen estimated coefficients (Table 6):
  - Armenia: CPI/PPI = -0.08*** (0.009); GDPC = 3.15*** (0.30); NFA = 0.46*** (0.10); TOT = -0.13* (0.09); AIC = -14.7; SC = -13.2; Log Likelihood = 373.
  - Georgia: CPI/PPI = 0.88*** (0.31); GDPC = 0.04 (0.09); NFA = -0.59** (0.27); TOT = -2.13*** (0.24); AIC = -12.32; SC = -10.73; Log Likelihood = 257.

*Source: _wp08110 - References (IMF staff paper content provided in the input).*

### References

### _wp08110 - References

### Exchange rate management, real exchange rates, and competitiveness
- Aglietta, Michel, Camille Baulant, and Sandra Moatti, 2003, “Exchange Rate Management in Central Europe and the Debate on Exchange Rate Regimes,” Revue economique, Vol. 54, No. 5, pp. 963–982.
- Chinn, Menzie, 2005, “A Primer on Real Effective Exchange Rates: Determinants, Overvaluation, Trade Flows and Competitive Devaluation,” NBER Working Paper 11521.
- Choudhri, Ehsan and Mohsin Khan, 2005, “Real Exchange Rates in Developing Countries: Are Balassa-Samuelson Effects Present?” IMF Staff Papers, Vol. 52 No.3, pp. 387–409 (Washington: International Monetary Fund).
- Chudik, Alexander and Joannes Mongardini, 2007, “In Search of Equilibrium: Estimating Real Exchange Rates in Sub-Saharan African Countries,” IMF Working Paper 07/90 (Washington: International Monetary Fund).
- Coudert, Virginie and Cecile Couharde, 2003, “Exchange Rate Regimes and Sustainable Parities For CEECs in the Run-up to EMU Membership,” Revue economique, Vol. 54, No. 5, pp. 983–1012.
- Di Bella, G., Lewis, M., and Martin, A., 2007, “Assessing Competitiveness and Real Exchange Rate Misalignment in Low-Income Countries,” IMF Working Paper No. 07/201 (Washington: International Monetary Fund).
- Dufrenot, Gilles J. and Etienne B. Yehoue, 2005, “Real Exchange Rate Misalignment: A Panel Co-Integration and Common Factor Analysis,” IMF Working Paper 05/164 (Washington: International Monetary Fund).
- Edwards, Sebastian, 1989, Real Exchange Rate Devaluation and Adjustments (Cambridge: MIT Press).
- Edwards, Sebastian, 1994, “Real and Monetary Determinants of Real Exchange Rate Behavior: Theory and Evidence from Developing Countries,” in Estimating Equilibrium Exchange Rates, edited by J. Williamson, pp. 61–91 (Washington: Institute for International Economics).
- Edwards, Sebastian, and Jonathan D. Ostry, 1990, “Anticipated Protectionist Policies, Real Exchange Rates and the Current Account,” Journal of International Money and Finance, Vol. 9, pp. 206–19.
- Edwards, Sebastian, and Miguel Savastano, 2000, “Exchange Rates in Emerging Economies: What Do We Know? What Do We Need to Know?” in Economic Policy Reform: The Second Stage, edited by Anne O. Krueger (Chicago: University of Chicago Press).
- Égert, Balázs, László Halpern and Ronald MacDonald, 2004, "Equilibrium Exchange Rates in Transition Economies: Taking Stock of the Issues," CEPR Discussion Papers 4809, C.E.P.R. Discussion Papers.
- Hinkle, L. and P. Montiel, 1999, Exchange Rate Misalignment, Concept and Measurement for Developing Countries (London: Oxford University).
- Krajnyak, K., Zettelmeyer, J., 1998, “Competitiveness in Transition Economies: What Scope for Real Appreciation?” IMF Staff Paper 45, pp. 309–362 (Washington: International Monetary Fund).
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- MacDonald, Ronald, 1997b, “Concepts to Calculate Equilibrium Exchange Rates: An Overview,” Deutsche Bundesbank Working Paper 3/00.
- Maeso-Fernandez Francisco, Chiara Osbat and Bernd Schnatz, 2004, “Towards the Estimation of Equilibrium Exchange Rate for CEE Acceding Countries: Methodological Issues and a Panel Cointegration Perspective,” ECB Working Papers No. 353.
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### Methodological and econometric approaches (unit roots, cointegration, panel methods, PMG/ARDL)
- Hausman, J., 1978, “Specification Tests in Econometrics,” Econometrica, Vol. 46, pp.1, 251–71.
- Im, K. S., M. H. Pesaran and Y. Shin, 2003, “Testing for Unit Roots in Heterogeneous Panels,” Journal of Econometrics, Vol. 115, 53-74.
- Levin, A., C. F. Lin and C. Chu, 2002, “Unit Root Tests in Panel Data: Asymptotic and Finite-Sample Properties,” Journal of Econometrics, Vol. 108, pp. 1–24.
- MacKinnon, James, Alfred Haug and Leo Michelis, 1999, “Numerical Distribution Functions of Likelihood Ratio Tests for Cointegration,” Journal of Applied Econometrics, Vol. 14(5), pp. 563–77.
- Pesaran, M Hashem, and Yongcheol Shin, 1999, “An Autoregressive Distributed Lag Modeling Approach to Cointegration Analysis,” in Econometrics and Economic Theory in the 20th Century: The Ragnar Frisch Centennial Symposium, edited by S. Strom (Cambridge, England: Cambridge University Press).
- Pesaran, M Hashem, Yongcheol Shin and Richard J Smith, 1999, “Pooled Mean Group Estimation Of Dynamic Heterogeneous Panels,” Journal of the American Statistical Association, Vol. 94, 621–34.
- Pesaran, M Hashem, Yongcheol Shin and Richard J Smith, 2001, “Bounds Testing Approaches to the Analysis of Level Relationships,” Journal of Applied Econometrics: Studies in Empirical Macroeconometrics, special issue in honor of J. D. Sargan, edited by D.F. Hendry and M.H. Pesaran, Vol.16, pp. 289–326.
- Chudik, Alexander and Joannes Mongardini, 2007, “In Search of Equilibrium: Estimating Real Exchange Rates in Sub-Saharan African Countries,” IMF Working Paper 07/90 (Washington: International Monetary Fund).
- Dufrenot, Gilles J. and Etienne B. Yehoue, 2005, “Real Exchange Rate Misalignment: A Panel Co-Integration and Common Factor Analysis,” IMF Working Paper 05/164 (Washington: International Monetary Fund).
- Kim, B-Y and Likka Korhonen, 2005, “Equilibrium Exchange Rates in Transition Countries: Evidence from Dynamic Heterogeneous Panel Models,” Economic Systems, Vol. 29, pp. 144–162.
- Maeso-Fernandez Francisco, Chiara Osbat and Bernd Schnatz, 2004, “Towards the Estimation of Equilibrium Exchange Rate for CEE Acceding Countries: Methodological Issues and a Panel Cointegration Perspective,” ECB Working Papers No. 353.

### IMF reports, datasets, and institutional methodologies
- International Monetary Fund, 2006a, “Armenia: 2006 Article IV Consultation – Staff Report.” (Washington: International Monetary Fund). Available via the Internet: http://www.imf.org/external/pubs/ft/scr/2006/cr06433.pdf
- International Monetary Fund, 2006b, “Georgia: 2006 Article IV Consultation – Staff Report.” (Washington: International Monetary Fund). Available via the Internet: http://www.imf.org/external/pubs/ft/scr/2006/cr06175.pdf
- International Monetary Fund, 2006c, “Georgia: Selected Issues” (Washington: International Monetary Fund). Available via the Internet: http://www.imf.org/external/pubs/ft/scr/2006/cr06170.pdf
- International Monetary Fund, 2006d, “Republic of Armenia: Selected Issues” (Washington: International Monetary Fund). Available via the Internet: http://www.imf.org/external/pubs/ft/scr/2006/cr06434.pdf
- International Monetary Fund, 2006e, World Economic Outlook, April 2006 (Washington: International Monetary Fund).
- International Monetary Fund, 2007, World Economic Outlook, April 2007 (Washington: International Monetary Fund).
- The International Monetary Fund Research Department, 2006, “Methodology for CGER Exchange Rate Assessments” (Washington: International Monetary Fund). Available via the Internet: http://www.imf.org/external/np/pp/eng/2006/110806.pdf
- Lane, Philip and Gian Maria Milesi-Ferretti, 2006, “The External Wealth of Nations Mark II: Revised and Extended Estimates of External Assets and Liabilities, 1970–2004,” IMF Working Paper 06/69 (Washington: Interantional Monetary Fund).

### Transition economies, Central and Eastern Europe, and accession issues
- Aglietta, Michel, Camille Baulant, and Sandra Moatti, 2003, “Exchange Rate Management in Central Europe and the Debate on Exchange Rate Regimes,” Revue economique, Vol. 54, No. 5, pp. 963–982.
- Burgess, R., S. Fabrizio, and Y. Xiao, 2003, “Competitiveness in the Baltics in the Run-Up to EU Accession,” IMF Country Report, 03/114 (Washington: International Monetary Fund).
- Coudert, Virginie and Cecile Couharde, 2003, “Exchange Rate Regimes and Sustainable Parities For CEECs in the Run-up to EMU Membership,” Revue economique, Vol. 54, No. 5, pp. 983–1012.
- Égert, Balázs, László Halpern and Ronald MacDonald, 2004, "Equilibrium Exchange Rates in Transition Economies: Taking Stock of the Issues," CEPR Discussion Papers 4809, C.E.P.R. Discussion Papers.
- Kim, B-Y and Likka Korhonen, 2005, “Equilibrium Exchange Rates in Transition Countries: Evidence from Dynamic Heterogeneous Panel Models,” Economic Systems, Vol. 29, pp. 144–162.
- Maeso-Fernandez Francisco, Chiara Osbat and Bernd Schnatz, 2004, “Towards the Estimation of Equilibrium Exchange Rate for CEE Acceding Countries: Methodological Issues and a Panel Cointegration Perspective,” ECB Working Papers No. 353.
- Oomes, Nienke, 2005, “Maintaining Competitiveness Under Equilibrium Real Appreciation: The Case of Slovakia,” IMF Working Paper 05/65 (Washington: International Monetary Fund).

*References list as provided in _wp08110 - References*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2008/_wp08110.pdf_