DP4869 Equilibrium Exchange Rates in Central and Eastern Europe: A Meta-Regression Analysis

Author(s): Balázs Égert , László Halpern

Publication Date: January 2005

Keyword(s): equilibrium exchange rate , Balassa-Samuelson effect , meta-analysis

JEL(s): C15 , E31 , F31 , O11 , P17

Programme Areas: Institutions and Economic Performance

Link to this Page: www.cepr.org/pubs/dps/DP4869.asp

This Paper sets out to analyse the ever-growing literature on equilibrium exchange rates in the new EU member states of Central and Eastern Europe in a quantitative manner using meta-regression analysis. We study the extent to which the estimated real misalignments reported in the literature depend on the underlying theoretical approach (Balassa-Samuelson effect, Behavioural Equilibrium Exchange Rate, Fundamental Equilibrium Exchange Rate) and on other characteristics of the individual studies. We also seek to explore whether we can gain more insight from the literature regarding what determines the size and, perhaps more importantly, the sign of the estimated coefficient of the productivity variable and of two other variables commonly included in real exchange rate determination equations, notably net foreign assets and openness.