For the small open economy of Botswana the PPP theory is validated in both the absolute and relative version for the Pula-Dollar exchange rate during the sample period 1992 third quarter to 2002 fourth quarter. The Pula-Dollar exchange rate is determined by the long-term trends in Botswana’s...

The aim of this paper is to apply recently developed panel cointegration techniques proposed by Pedroni (1999, 2004) and generalized by Banerjee and Carrion-i-Silvestre (2006) to examine the robustness of the PPP concept for a sample of 80 developed and developing countries. We find that strong...

Real exchange rate (RER) is an important instrument for restoring sustainable economic growth in the small open economy with large export share. RER of Ukrainian currency can be explained within the real business cycle (RBC) framework without any forms of nominal rigidities. Fitting Ukrainian...

Reliable medium-term forecasts are essential for forward-looking monetary policy decisionmaking. Traditionally, predictions of the exchange rate tend to be linked to the equilibrium concept implied by the purchasing power parity (PPP) theory. In particular, the traditional benchmark for exchange...

Exploring the determinants and dynamics of the current account balance is one of the priorities of academic literature and policy circles. Although the effects of structural variables are deeply analyzed, a lesser attention has been paid to the impact of financial variables. Drawing on standard...

In this paper we simultaneously estimate the real exchange rates between the Swedish Krona, the US Dollar and the Euro. A prime candidate for explaining the exchange rate movements is relative potential output. Since this variable is unobservable, cyclical and potential output are estimated in...

The paper surveys empirical evidence on the Harrod-Balassa-Samuelson effect. The survey encompasses the published empirical work on the phenomenon since its (re)discovery in 1964. In total, 58 empirical papers are examined within a specialized analytical framework. The body of empirical evidence...

In this paper we investigate purchasing power parity in the CEE and post-war former Yugoslav countries during the EU integration process in 1994–2006. This work stems from longer-term tests of real exchange rate convergence in the former Yugoslavia. This period is of interest on two fronts:...

Standard models of international risk sharing with complete asset markets predict a positive association between relative consumption growth and real exchange-rate depreciations across countries. The striking lack of evidence for this link — the consumption/real exchange-rate anomaly or...

Standard models of international risk sharing with complete asset markets predict a positive association between relative consumption growth and real exchange-rate depreciations across countries. The striking lack of evidence for this link - the consumption/real-exchange-rate anomaly or...