The impact of real exchange rates on price competitiveness in Eastern European countries

Proskurnina N, Kähler J, Cervantes-Martinez R (2020)

Publication Type: Journal article

Publication year: 2020

Journal

Economics of Development Kharkiv National University of Economics

Book Volume: 19

Pages Range: 45-55

Issue: 1

DOI: 10.21511/ed.19(1).2020.05

Abstract

The subject of this paper is empirical research on studies of exchange rates in Eastern European countries, such as Albania, Bulgaria, Bosnia and Herzegovina, Belarus, Czech Republic, Estonia, Croatia, Hungary, Latvia, Lithuania, Moldova, (North) Macedonia, Montenegro, Poland, Romania, Serbia, Slovakia, and Slovenia, in order verify the validity of theories that explain these changes. This research aims to explain the mixed evidence of the Balassa-Samuelson effect in Ukraine, taking into account the intentions of Ukraine to become a member of the European Union. Unlike previous works, the attention is shifted to a review of empirical evidence and the identification of main factors that limit the ability to verify the theory. The main conclusion is that all the currencies studied underwent substantial real appreciations during the study period. Thus, it can be concluded that an adequate monetary policy in countries under study is very important, given that local exchange markets are not sustainable enough and the volatility of exchange operations is higher than in countries with developed economies. However, the Balassa-Samuelson Hypothesis (BSH) can explain the impact of the real exchange rate due to changes in productivity in countries in transition.

Authors with CRIS profile

Jürgen Kähler Lehrstuhl für Volkswirtschaftslehre mit dem Schwerpunkt Entwicklungsökonomik

Involved external institutions

Kharkiv National University of Economics UA Ukraine (UA) Universidad de Guadalajara (UDEG) MX Mexico (MX)

How to cite

APA:

Proskurnina, N., Kähler, J., & Cervantes-Martinez, R. (2020). The impact of real exchange rates on price competitiveness in Eastern European countries. Economics of Development, 19, 45-55. https://dx.doi.org/10.21511/ed.19(1).2020.05

MLA:

Proskurnina, Nadiia, Jürgen Kähler, and Rosario Cervantes-Martinez. "The impact of real exchange rates on price competitiveness in Eastern European countries." Economics of Development 19 (2020): 45-55.

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