Real Exchange Rates in Transition Economies

53 Pages Posted: 4 Sep 2002

See all articles by Bostjan Jazbec

Bostjan Jazbec

University of Ljubljana - Faculty of Economics

Date Written: July 2002

Abstract

Paper attempts to develop a model suitable for an analysis of the real exchange rate determination in transition economies. The main distinction from other approaches to the real exchange rate determination is an introduction of the pre-transition period which enables one to separately examine the role of adverse initial conditions and labor market reallocation between the tradable and non-tradable good sectors believed to characterize the extent of structural reforms in transition economies. Empirical findings seem to confirm that transition - when looking only at the real exchange rate behavior - is over once the progress in structural reforms does not affect the real exchange rate determination relative to other factors. Along the lines of research on growth prospects in transition economies, the effect of structural changes on the real exchange rate in more advanced transition economies has on average diminished in the fifth year of the transition process. The results for less advanced economies are in line with other studies on transition.

Keywords: transition economies, real exchange rate, fixed-effects model

JEL Classification: F31, F41, P22, P27

Suggested Citation

Jazbec, Bostjan, Real Exchange Rates in Transition Economies (July 2002). Available at SSRN: https://ssrn.com/abstract=319561 or http://dx.doi.org/10.2139/ssrn.319561

Bostjan Jazbec (Contact Author)

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia
+386 1 5892 623 (Phone)
+ 386 1 5892 698 (Fax)

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