Bilateral Equilibrium Exchange Rates of the EU Accession Countries against the Euro

In this paper we apply two different concepts (BEER and PEER) to calculate real equilibrium exchange rates for fiveEast and Central European EU accession countries. From the results bilateral nominal equilibrium exchange rates againstthe euro are obtained through an algebraic transformation. Furthermore, panel cointegration techniques are used to checkthe adequacy of the empirical model. The results indicate a substantial overvaluation of the real exchange rate inseveral EU accession countries. The magnitude of overvaluation turns out to be even higher when the exchange rate isexpressed in nominal terms against the euro.