Real exchange rates in small open OECD and transition economies: Comparing apples with oranges?

Balázs Égert; Kirsten Lommatzsch; Amina Lahrèche-Révil

doi:10.1016/j.jbankfin.2006.06.005

Journal of Banking & Finance Vol. 30 No. 12 2006

Real exchange rates in small open OECD and transition economies: Comparing apples with oranges?

Balázs Égert^1,2,3,4,5; Kirsten Lommatzsch⁶; Amina Lahrèche-Révil

¹ Davidson College · ² Université Paris Cité · ³ National Bank of Austria · ⁴ Université Paris Nanterre · ⁵ EconomiX · ⁶ German Institute for Economic Research

Abstract

We find that productivity gains in tradables cause an appreciation of the real exchange rate via both tradable and nontradable prices in the CEE-5 and have no affect in the Baltic countries, while they lead to a depreciation of the real exchange rate of tradables in OECD economies that overcompensates the appreciation due to nontradable prices. Rising net foreign liabilities lead to a real appreciation in the Baltic countries instead of the expected depreciation found in OECD and CEE-5 countries. These differences are due to the different impact of the fundamentals on the real exchange rate depending on the time horizon studied.

DOI: 10.1016/j.jbankfin.2006.06.005
Volume: 30
Issue: 12
Pages: 3393-3406
Language: en
Sources: openalex crossref bibtex:phds-export.bib

Real exchange rates in small open OECD and transition economies: Comparing apples with oranges?

Abstract

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