In Search of a Dramatic Equilibrium: Was the Armenian Dram Overvalued?
March 1, 2009
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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:
Issue:
049
Series:
Working Paper No. 2009/049
Stock No:
WPIEA2009049
ISBN:
9781451871975
ISSN:
1018-5941
