In Search of a Dramatic Equilibrium: Was the Armenian Dram Overvalued?

ByNienke Oomes, Vahram Stepanyan, Gohar Minasyan, Ara Stepanyan

March 1, 2009

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

This papers estimates the equilibrium exchange rate for Armenia using three different approaches: the purchasing power parity (PPP) approach, the behavioral equilibrium exchange rate (BEER) approach, and the external sustainability (ES) approach. All three approaches suggest that the dram was overvalued by about 20–30 percent prior to the devaluation of the dram in March 2009.

Subject: Exchange rates, Foreign exchange, Production, Productivity, Purchasing power parity, Real effective exchange rates, Real exchange rates

Keywords: Balassa-Samuelson, competitiveness, Eastern Europe, equilibrium exchange rate determinant, equilibrium exchange rate path, exchange rate, Exchange rates, Middle East, misalignment, PPP approach, Productivity, productivity differential, Purchasing power parity, Real effective exchange rates, Real exchange rate, Real exchange rates, trade partner, WP

Pages:
22
Volume:
2009
DOI:
https://doi.org/10.5089/9781451871975.001
Issue:
049
Series:
Working Paper No. 2009/049
Stock No:
WPIEA2009049
ISBN:
9781451871975
ISSN:
1018-5941

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