Sustainable Real Exchange Rates in the New Eu Member States : What Did the Great Recession Change?

Author/Editor:

Katerina Smídková ; Jan Babecky ; Ales Bulir

Publication Date:

August 1, 2010

Electronic Access:

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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:

The Great Recession affected export and import patterns in our sample countries, and these changes, coupled with a more volatile external environment, have profound impact on our estimates of real exchange rate misalignments and projections of sustainable real exchange rates. We find that real misalignments in several countries with pegged exchange rates and excessive external liabilities widened relative to earlier estimates. While countries with balanced net trade positions are expected to continue to experience appreciation during 2010-2014, several currencies are likely to require real depreciation to maintain sustainable net external debt. Our estimates point to somewhat larger disequilibria than those of IMF country teams, however, any estimates of equilibrium exchange rates are subject to sizable uncertainty.

Series:

Working Paper No. 10/198

Subject:

English

Publication Date:

August 1, 2010

ISBN/ISSN:

9781455205288/1018-5941

Stock No:

WPIEA2010198

Format:

Paper

Pages:

25

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