IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/2009-049.html
   My bibliography  Save this paper

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

Author

Listed:
  • Nienke Oomes
  • Vahram Stepanyan
  • Gohar Minasyan
  • Ara Stepanyan

Abstract

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.

Suggested Citation

  • Nienke Oomes & Vahram Stepanyan & Gohar Minasyan & Ara Stepanyan, 2009. "In Search of a Dramatic Equilibrium: Was the Armenian Dram Overvalued?," IMF Working Papers 2009/049, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2009/049
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=22783
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kenneth Rogoff, 1996. "The Purchasing Power Parity Puzzle," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 647-668, June.
    2. Coricelli, Fabrizio & Jazbec, Bostjan, 2004. "Real exchange rate dynamics in transition economies," Structural Change and Economic Dynamics, Elsevier, vol. 15(1), pages 83-100, March.
    3. De Gregorio, Jose & Giovannini, Alberto & Wolf, Holger C., 1994. "International evidence on tradables and nontradables inflation," European Economic Review, Elsevier, vol. 38(6), pages 1225-1244, June.
    4. repec:zbw:bofitp:2001_007 is not listed on IDEAS
    5. Maeso-Fernandez, Francisco & Osbat, Chiara & Schnatz, Bernd, 2005. "Pitfalls in estimating equilibrium exchange rates for transition economies," Economic Systems, Elsevier, vol. 29(2), pages 130-143, June.
    6. repec:bla:etrans:v:10:y:2002-07:i:2:p:273-309 is not listed on IDEAS
    7. Philip R. Lane & Gian Maria Milesi-Ferretti, 2002. "Long-Term Capital Movements," NBER Chapters, in: NBER Macroeconomics Annual 2001, Volume 16, pages 73-136, National Bureau of Economic Research, Inc.
    8. International Monetary Fund, 2001. "Interpreting Real Exchange Rate Movements in Transition Countries," IMF Working Papers 2001/056, International Monetary Fund.
    9. Frankel, Jeffrey, 2004. "On the Renminbi: The Choice between Adjustment under a Fixed Exchange Rate and Adustment under a Flexible Rate," Working Paper Series rwp04-037, Harvard University, John F. Kennedy School of Government.
    10. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72(6), pages 584-584.
    11. repec:zbw:bofitp:2002_006 is not listed on IDEAS
    12. Jeffrey Frankel, 2005. "On the renminbi," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 6(03), pages 16-21, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Miss Anke Weber & Ms. Chunfang Yang, 2011. "Armenia: An Assessment of the Real Exchange Rate and Competitiveness," IMF Working Papers 2011/020, International Monetary Fund.
    2. Gor A. Khachatryan & Aleksandr Grigoryan, 2020. "Export Growth Dynamics and Real Exchange Rate: Evidence from Armenia," International Economic Journal, Taylor & Francis Journals, vol. 34(3), pages 493-509, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Robert J. Sonora & Josip Tica, 2014. "Harrod, Balassa, and Samuelson (re)visit Eastern Europe," Cogent Economics & Finance, Taylor & Francis Journals, vol. 2(1), pages 1-17, December.
    2. Balázs Égert & László Halpern & Ronald MacDonald, 2006. "Equilibrium Exchange Rates in Transition Economies: Taking Stock of the Issues," Journal of Economic Surveys, Wiley Blackwell, vol. 20(2), pages 257-324, April.
    3. International Monetary Fund, 2005. "Republic of Kazakhstan: Selected Issues," IMF Staff Country Reports 2005/240, International Monetary Fund.
    4. Égert, Balázs, 2004. "Assessing equilibrium exchange rates in CEE acceding countries: can we have DEER with BEER without FEER? A critical survey of the literature," BOFIT Discussion Papers 1/2004, Bank of Finland Institute for Emerging Economies (BOFIT).
    5. Vasily Astrov, 2005. "Sectoral Productivity, Demand, and Terms of Trade: What Drives the Real Appreciation of the East European Currencies?," wiiw Working Papers 34, The Vienna Institute for International Economic Studies, wiiw.
    6. Cheng, Wenli & Zhang, Dingsheng, 2012. "A monetary model of China–US trade relations," Economic Modelling, Elsevier, vol. 29(2), pages 233-238.
    7. Attila Csajbók (ed.) & Ágnes Csermely (ed.), 2002. "Adopting the euro in Hungary: expected costs, benefits and timing," MNB Occasional Papers 2002/24, Magyar Nemzeti Bank (Central Bank of Hungary).
    8. Zhang, Zhibai, 2010. "A comparison of the BEER and Penn effect models via their applications on the valuation of the Renminbi," MPRA Paper 40649, University Library of Munich, Germany.
    9. Zhibai Zhang & Xinyue Zou, 2013. "The Ratio Model and its Application: A Revisit," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 3(6), pages 1-4.
    10. Ana Cardoso & António Portugal Duarte, 2017. "The impact of the Chinese exchange policy on foreign trade with the European Union," Brazilian Journal of Political Economy, Center of Political Economy, vol. 37(4), pages 870-893.
    11. García Solanes José, 2008. "Real Exchange Rate Appreciation in Central and Eastern European Countries. Why the Balassa-Samuelson Effect Does Not Explain the Whole Story," Working Papers 2010100, Fundacion BBVA / BBVA Foundation.
    12. International Monetary Fund, 2008. "Republic of Armenia: Selected Issues," IMF Staff Country Reports 2008/375, International Monetary Fund.
    13. repec:zbw:bofitp:2004_001 is not listed on IDEAS
    14. Zhang, Zhibai, 2010. "Understanding the behavioral equilibrium exchange rate model via its application to the valuation of Chinese renminbi," MPRA Paper 40648, University Library of Munich, Germany.
    15. Lucian Claudiu ANGHEL & Laurentiu-Mihai TREAPAT, 2015. "Main Economic Policies in order to Manage an Optimum Accession of Romania to the Euro Zone," Management Dynamics in the Knowledge Economy, College of Management, National University of Political Studies and Public Administration, vol. 3(1), pages 151-169, March.
    16. Rimgailaite, Ramune, 2012. "Exchange rate modelling for Lithuania and Switzerland," MPRA Paper 43451, University Library of Munich, Germany.
    17. Maican, Florin G. & Sweeney, Richard J., 2013. "Real exchange rate adjustment in European transition countries," Journal of Banking & Finance, Elsevier, vol. 37(3), pages 907-926.
    18. Christoph Fischer, 2004. "Real currency appreciation in accession countries: Balassa-Samuelson and investment demand," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 140(2), pages 179-210, June.
    19. Borgersen, Trond-Arne & King, Roswitha M., 2011. "Reallocation and restructuring: A generalization of the Balassa–Samuelson effect," Structural Change and Economic Dynamics, Elsevier, vol. 22(4), pages 287-298.
    20. XU, Yingfeng, 2009. "Relevant international experience of real exchange rate adjustment for China," China Economic Review, Elsevier, vol. 20(3), pages 440-451, September.
    21. 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.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:2009/049. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.