Estimating Equilibrium Exchange Rates for Armenia and Georgia
IMF Working Papers, April 1, 2008
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- Estimating Equilibrium Exchange Rates for Armenia and Georgia
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Bibliographic details
- Authors: Shuang Ding, Omar Al Shehabi
- Published: April 1, 2008
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451869705.001
Summary
- The paper examines whether the significant real exchange rate appreciation in Armenia and Georgia since 2003, together with persistent current account deficits, implies overvaluation of their real exchange rates.
- Approach: Applies the behavioral equilibrium exchange rate approach, complemented by an analysis of the traditional competitiveness indicators.
- Main result: Indicates an undervaluation of the Armenian dram and no significant misalignment of the Georgian lari in 2006.
Methodology
- Behavioral equilibrium exchange rate approach used to identify possible exchange rate misalignment.
- Complementary analysis based on traditional competitiveness indicators.
Key Findings
- Undervaluation of the Armenian dram in 2006.
- No significant misalignment of the Georgian lari in 2006.
- Contextual factors motivating the analysis: significant real exchange rate appreciation since 2003 and persistent current account deficits.