IMF Working Papers

Competitiveness and the Equilibrium Exchange Rate in Costa Rica

By Claudio A Paiva

February 1, 2001

Download PDF

Preview Citation

Format: Chicago

Claudio A Paiva. Competitiveness and the Equilibrium Exchange Rate in Costa Rica, (USA: International Monetary Fund, 2001) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper evaluates several indicators of external vulnerability and estimates the equilibrium real exchange rate for Costa Rica. While current indicators are mostly positive, declining market shares of domestic exports, the expected decline in foreign direct investment, and the desirability of strengthening the reserve position recommend an improvement in the current account. Costa Rica’s equilibrium real exchange rate is then estimated using the CGER and the FEER methodologies. The overall conclusion is that while there are no signs of serious external vulnerability, the real exchange rate appears to be somewhat overvalued, a situation that would be best addressed through increased fiscal discipline.

Subject: Balance of payments, Current account, Current account deficits, Exchange rates, External debt, Foreign exchange, Real exchange rates

Keywords: Central bank of Costa Rica, Competitiveness, Costa Rica colón, Current account, Current account deficits, Current account sustainability, Current account upturn, Equilibrium exchange rate, Equilibrium real effective exchange rate, Exchange rate, Exchange rate movement, Exchange rates, Export base, External vulnerability, FDI inflow, GDP, Real exchange rates, WP

Publication Details

  • Pages:

    29

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2001/023

  • Stock No:

    WPIEA0232001

  • ISBN:

    9781451844047

  • ISSN:

    1018-5941

You May Also Be Interested In...

Guidance Note On The Financing Assurances And Sovereign Arrears Policies And The Fund's Role In Debt Restructurings

November 18, 2024

EBA-Lite 3.0 Model and Methodology

November 18, 2024

Islamic Republic of Mauritania: Technical Assistance Project on Public Debt Projections: Scoping Mission Report

November 15, 2024

Foreign Exchange Intervention Under the Integrated Policy Framework: The Case of India

November 15, 2024