IMF Working Papers

Equilibrium Exchange Rates in Transition Economies

By Lionel Halpern, Charles Wyplosz

November 1, 1996

Preview Citation

Format: Chicago

Lionel Halpern, and Charles Wyplosz. Equilibrium Exchange Rates in Transition Economies, (USA: International Monetary Fund, 1996) accessed November 22, 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

A stylized fact of the transition process is an early profound exchange rate depreciation followed by continuing real appreciation. Absent historical reference points, it is difficult to judge whether the real appreciation is threatening competitiveness. This paper interprets the stylized facts and offers estimates of the equilibrium real exchange rate based on an international comparison of dollar wages and on a study of the dynamics of real exchange rates in several transition economies. The results suggest that the process of real appreciation is a combination of a return to equilibrium following the early overshooting and equilibrium appreciation.

Subject: Balance of payments, Current account, Exchange rates, Foreign exchange, Inflation, Labor, Prices, Real exchange rates, Wages

Keywords: Africa, Asia and Pacific, Central and Eastern Europe, Current account, Dollar wage, Equilibrium exchange rates, Exchange rate regime, Exchange rates, Inflation, Inflation rate, Managed float, Nominal exchange rate, Rate appreciation, Rate depreciation, Rate of exchange, Real exchange rates, Southeast Asia, Undervalued exchange rate, Wages, Western Europe, WP

Publication Details

  • Pages:

    40

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1996/125

  • Stock No:

    WPIEA1251996

  • ISBN:

    9781451854794

  • ISSN:

    1018-5941

Notes

Also published in Staff Papers, Vol. 44, No. 4, December 1997.

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