This paper constructs annual trade-weighted nominal and real effective exchange rate indices for Denmark covering the period since the introduction of the krone as the Danish currency unit in 1875. Two real effective krone rate indices with respectively wholesale prices and consumer prices used...

The paper reviews the empirical evidence regarding long-run relative purchasing-powerparity (PPP) convergence in the case of Denmark using simple unit-root tests and cointegration tests on new historical time-series indices for the effective krone rate since 1875. The results based on a real...

For empirical purposes it is suggested to approximate the real interest rate gap by a simple transformation of the difference between two nominal interest rates, the central bank's policy rate and the long-term interest rate. The latter contains information on inflationary expectations and...