The equilibrium real exchange rate: pros and cons of different approaches with application to Latvia Cover Image

The equilibrium real exchange rate: pros and cons of different approaches with application to Latvia
The equilibrium real exchange rate: pros and cons of different approaches with application to Latvia

Author(s): Olegs Tkacevs, Viktors Ajevskis, Ramune Rimgailaite, Uldis Rutkaste
Subject(s): Economy, National Economy, Financial Markets
Published by: BICEPS/SSE Riga
Keywords: BEER; FEER; Latvia; NATREX; SVAR;

Summary/Abstract: This paper studies various approaches to the equilibrium real effective exchange rate estimation, including structural and direct estimation approaches. It shows their strengths and weaknesses with application to the case of Latvia. Despite the approaches differing considerably in terms of their theoretical background and data used they all indicate that the real exchange rate of Latvia after appreciation during the boom years and subsequent adjustment afterwards remained close to its equilibrium level at the end of the sample period, namely at the end of 2010.

  • Issue Year: 14/2014
  • Issue No: 1+2
  • Page Range: 101-123
  • Page Count: 23
  • Language: English