## Competitiveness in Bulgaria: An Assessment of the Real Effective Exchange Rate

_IMF Working Papers, March 1, 2004_

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## Bibliographic details
- Authors: Piritta Sorsa, Dimitar Chobanov
- Published: March 1, 2004
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451845600.001

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### Summary
- This paper presents an empirical analysis of the medium- and long-term determinants of the real (effective) exchange rate (RER) of the Bulgarian lev using elements from the natural real exchange rate (NATREX) and the behavioral equilibrium exchange rate (BEER) approaches.
- The results indicate that the RER is driven by fundamentals, including labor productivity, terms of trade, world real interest rates, gross savings, and foreign direct investment.
- The model also shows that there is no significant misalignment of the Bulgarian lev.

### Methodology
- Approaches used: NATREX (natural real exchange rate) and BEER (behavioral equilibrium exchange rate).
- Scope: Empirical analysis of medium- and long-term determinants of the Bulgarian lev real effective exchange rate.

### Major determinants identified
- Labor productivity
- Terms of trade
- World real interest rates
- Gross savings
- Foreign direct investment

### Main findings
- The RER of the Bulgarian lev is driven by identified fundamentals (labor productivity, terms of trade, world real interest rates, gross savings, and foreign direct investment).
- The model indicates there is no significant misalignment of the Bulgarian lev.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/competitiveness-in-bulgaria-an-assessment-of-the-real-effective-exchange-rate-17187_