Publication detail

Equilibrium Exchange Rates in EU New Members: Methodology, Estimation and Applicability to ERM II

Author(s): prof. Roman Horváth Ph.D., Lubos Komarek
Type: Articles in journals with impact factor
Year: 2007
Number: 0
Published in: Prague Economic Papers, pp. 24-37
Publishing place: Prague
Keywords: Equilibrium Exchange Rate, ERM II, EU New Member States
JEL codes: C52, C53, E58, E61, F31
Suggested Citation:
Abstract: In this paper we discuss the estimation and methodology of the real equilibrium exchange rate partial equilibrium models and analyze to what extent the resulting estimates are applicable for setting the central parity prior to ERM II entry in the new EU member states. Given the uncertainty surrounding the estimates, we argue that they are informative in the sign rather than the size of the misalignment of the exchange rate, but may still serve as useful consistency checks for the decision on the setting of the central parity. We argue that policy makers should consider the estimates in their decision-making only if the real exchange rate is substantially misaligned.




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