Real effective exchange rate misalignment in the euro area : a counterfactual analysis / Makram El-Shagi; Axel Lindner; Gregor von Schweinitz
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Discovery
78688083X
URN
urn:nbn:de:gbv:3:2-28859
DOI
ISBN
ISSN
Autorin / Autor
Beiträger
Körperschaft
Erschienen
Halle (Saale) : Inst. für Wirtschaftsforschung, 2014
Umfang
Online-Ressource (PDF-Datei: IV, 29 S., 0,94 MB) : graph. Darst.
Ausgabevermerk
Sprache
eng
Anmerkungen
Inhaltliche Zusammenfassung
Were real effective exchange rates (REER) of Euro area member countries drastically misaligned at the outbreak of the global financial crisis? The answer is difficult to determine because economic theory gives no simple guideline for determining the equilibrium values of real exchange rates, and the determinants of those values might have been distorted as well. To overcome these limitations, we use synthetic matching to construct a counterfactual economy for each member as a linear combination of a large set of non-Euro area countries. We find that Euro area crisis countries are best described by a mixture of advanced and emerging economies. Comparing the actual REER with those of the counterfactuals gives sensible estimates of the misalignments at the start of the crisis: All peripheral countries were strongly overvalued, while high undervaluation is only observed for Finland.
Schriftenreihe
IWH-Diskussionspapiere ; 2014,6 ppn:37244492X