On equilibrium real exchange rates in euro area: Special focus on behavioral equilibrium exchange rates in Ireland and Greece
This paper focuses on the intra-euro-area imbalances. Therefore the first aim of this paper is to identify euro-area countries exhibiting macroeconomic imbalances. The subsequent aim is to estimate equilibrium real exchange rates for these countries and to compute their degrees of real exchange rate...
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| Format: | Article |
| Language: | English |
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Mendel University Press
2012-01-01
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| Series: | Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis |
| Subjects: | |
| Online Access: | https://acta.mendelu.cz/60/2/0261/ |
| _version_ | 1819320249256771584 |
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| author | Klára Plecitá Luboš Střelec |
| author_facet | Klára Plecitá Luboš Střelec |
| author_sort | Klára Plecitá |
| collection | DOAJ |
| description | This paper focuses on the intra-euro-area imbalances. Therefore the first aim of this paper is to identify euro-area countries exhibiting macroeconomic imbalances. The subsequent aim is to estimate equilibrium real exchange rates for these countries and to compute their degrees of real exchange rate misalignment. The intra-area balance is assessed using the Cluster Analysis and the Principle Component Analysis; on this basis Greece and Ireland are selected as the two euro-area countries with largest imbalances in 2010. Further the medium-run equilibrium exchange rates for Greece and Ireland are estimated applying the Behavioral Equilibrium Exchange Rate (BEER) approach popularised by Clark and MacDonald (1998). In addition, the long-run equilibrium exchange rates are estimated using the Permanent Equilibrium Exchange Rate (PEER) model. Employing the BEER and PEER approaches on quarterly time series of real effective exchange rates (REER) from 1997: Q1 to 2010: Q4 we identify an undervaluation of the Greek and Irish REER around their entrance to the euro area. For the rest of the period analysed their REER is broadly in line with estimated BEER and PEER levels. |
| first_indexed | 2024-12-24T11:16:35Z |
| format | Article |
| id | doaj.art-781f2c5348e24b53864bdae44b2bfc79 |
| institution | Directory Open Access Journal |
| issn | 1211-8516 2464-8310 |
| language | English |
| last_indexed | 2024-12-24T11:16:35Z |
| publishDate | 2012-01-01 |
| publisher | Mendel University Press |
| record_format | Article |
| series | Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis |
| spelling | doaj.art-781f2c5348e24b53864bdae44b2bfc792022-12-21T16:58:21ZengMendel University PressActa Universitatis Agriculturae et Silviculturae Mendelianae Brunensis1211-85162464-83102012-01-0160226127010.11118/actaun201260020261On equilibrium real exchange rates in euro area: Special focus on behavioral equilibrium exchange rates in Ireland and GreeceKlára Plecitá0Luboš Střelec1Ústav financí, Mendelova univerzita v Brně, Zemědělská 1, 613 00 Brno, Česká republikaÚstav statistiky a operačního výzkumu, Mendelova univerzita v Brně, Zemědělská 1, 613 00 Brno, Česká republikaThis paper focuses on the intra-euro-area imbalances. Therefore the first aim of this paper is to identify euro-area countries exhibiting macroeconomic imbalances. The subsequent aim is to estimate equilibrium real exchange rates for these countries and to compute their degrees of real exchange rate misalignment. The intra-area balance is assessed using the Cluster Analysis and the Principle Component Analysis; on this basis Greece and Ireland are selected as the two euro-area countries with largest imbalances in 2010. Further the medium-run equilibrium exchange rates for Greece and Ireland are estimated applying the Behavioral Equilibrium Exchange Rate (BEER) approach popularised by Clark and MacDonald (1998). In addition, the long-run equilibrium exchange rates are estimated using the Permanent Equilibrium Exchange Rate (PEER) model. Employing the BEER and PEER approaches on quarterly time series of real effective exchange rates (REER) from 1997: Q1 to 2010: Q4 we identify an undervaluation of the Greek and Irish REER around their entrance to the euro area. For the rest of the period analysed their REER is broadly in line with estimated BEER and PEER levels.https://acta.mendelu.cz/60/2/0261/equilibrium exchange rateBEERPEERmacroeconomic balanceIrelandGreece |
| spellingShingle | Klára Plecitá Luboš Střelec On equilibrium real exchange rates in euro area: Special focus on behavioral equilibrium exchange rates in Ireland and Greece Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis equilibrium exchange rate BEER PEER macroeconomic balance Ireland Greece |
| title | On equilibrium real exchange rates in euro area: Special focus on behavioral equilibrium exchange rates in Ireland and Greece |
| title_full | On equilibrium real exchange rates in euro area: Special focus on behavioral equilibrium exchange rates in Ireland and Greece |
| title_fullStr | On equilibrium real exchange rates in euro area: Special focus on behavioral equilibrium exchange rates in Ireland and Greece |
| title_full_unstemmed | On equilibrium real exchange rates in euro area: Special focus on behavioral equilibrium exchange rates in Ireland and Greece |
| title_short | On equilibrium real exchange rates in euro area: Special focus on behavioral equilibrium exchange rates in Ireland and Greece |
| title_sort | on equilibrium real exchange rates in euro area special focus on behavioral equilibrium exchange rates in ireland and greece |
| topic | equilibrium exchange rate BEER PEER macroeconomic balance Ireland Greece |
| url | https://acta.mendelu.cz/60/2/0261/ |
| work_keys_str_mv | AT klaraplecita onequilibriumrealexchangeratesineuroareaspecialfocusonbehavioralequilibriumexchangeratesinirelandandgreece AT lubosstrelec onequilibriumrealexchangeratesineuroareaspecialfocusonbehavioralequilibriumexchangeratesinirelandandgreece |