This paper analyzes disparities among nominal and real exchange rate movements across the Central and Eastern European (CEE) countries from 1991 to 1996. The method of analyzing such processes is to examine whether the differentials of exchange rate changes converge or diverge over time....

Many authors have documented that it is challenging to explain exchange rate fluctuations with macroeconomic fundamentals: a random walk forecasts future exchange rates better than existing macroeconomic models. This paper applies newly developed tests for nested model that are robust to the...