Equilibrium exchange rates in Central and Eastern Europe : A meta-regression analysis

Abstract

This paper analyses 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.The results indicate that the real misalignments reported in the literature are systematically influenced, inter alia, by the underlying theoretical concepts (Balassa-Samuelson effect, Behavioural Equilibrium Exchange Rate, Fundamental Equilibrium Exchange Rate) and by the econometric estimation methods.The important implication of these findings is that a systematic analysis is needed in terms of both alternative economic and econometric specifications to assess equilibrium exchange rates. JEL: C15, E31, F31, O11, P17. Keywords: equilibrium exchange rate, Balassa-Samuelson effect, meta-analysis