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Real exchange rate determination in eastern Europe

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  • Sanja Grubacic

Abstract

This paper develops a simple theoretical model of exchange rate determination in a transitional economy. The distinguishing feature of the model is the retention of market failures pertaining to the production and consumption of nontradable goods and, therefore, the likelihood of real exchange rate appreciation. Using this framework, the econometric tests are performed for the Czech Republic, Slovenia, Poland, and Hungary, and appropriate macroeconomic and exchange rate policies are recommended to support further liberalization and development of the foreign exchange market. Copyright International Atlantic Economic Society 2000

Suggested Citation

  • Sanja Grubacic, 2000. "Real exchange rate determination in eastern Europe," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 28(3), pages 346-363, September.
    • Handle: RePEc:kap:atlecj:v:28:y:2000:i:3:p:346-363
    DOI: 10.1007/BF02298326
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    References listed on IDEAS

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    1. Mr. Peter B. Clark & Mr. Steven A. Symansky & Mr. Tamim Bayoumi & Mr. Mark P. Taylor, 1994. "Robustness of Equilibrium Exchange Rate Calculations to Alternative Assumptions and Methodologies," IMF Working Papers 1994/017, International Monetary Fund.
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    Cited by:

    1. Jaanus Raim, 2004. "The Alternative to the Existing System of the Concepts about Purchasing Power Parity Deviations . Derived from the Estonian Experience," Working Papers 115, Tallinn School of Economics and Business Administration, Tallinn University of Technology.

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