Republic of Latvia: Selected Issues

August 16, 2004

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Format: Chicago

Republic of Latvia: Selected Issues, (USA: International Monetary Fund, 2004) accessed September 19, 2024

Summary

This Selected Issues paper assesses whether Latvia’s strategy to enter ERM2 and adopt the euro is appropriate. The paper examines the possibility of an exchange rate misalignment from various perspectives. It considers different notions of the real effective exchange rate and competitiveness; deviations of the exchange rate from statistically defined equilibrium concepts; and the possibility that central bank foreign exchange interventions have maintained the exchange rate artificially away from equilibrium. The paper finds little evidence of a major misalignment. The paper also analyzes modeling inflation in Latvia.

Subject: Banking, Credit, Exchange rates, Fiscal policy, Fiscal stance, Foreign exchange, Inflation, Money, Potential output, Prices, Production

Keywords: Baltics, CR, Credit, Deficit, Eastern Europe, Exchange rate, Exchange rates, Fiscal policy stance, Fiscal stance, GDP assumption, Inflation, ISCR, Potential output, Price level, Production function approach, Revenue elasticity

Publication Details

Pages:

46
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2004/261
Stock No:

1LVAEA0032004
ISBN:

9781451824544
ISSN:

1934-7685

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