Resource title

The behavioural zloty/euro equilibrium exchange rate

Resource image

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Resource description

Poland is obligated to adopt the euro after the fulfilment, inter alia, of the exchange rate criterion which requires entering the Exchange Rate Mechanism II (ERM II). The European Central Bank recommends that the ERM II central rate should reflect the best possible assessment of the equilibrium exchange rate. In this paper we use the BEER and PEER approach to estimate real Polish zloty/euro equilibrium rate. Although the main goal of our analysis is to compute measures of current and total misalignment, we also check the sensitivity of the equilibrium exchange rate estimates to our choice of the risk premium proxy as well as to our approach for computing the total misalignment. We demonstrate that the BEER/PEER estimates of the PLN/EUR rate are statistically robust and that this approach may be useful for setting the central parity rate at which the zloty enters ERM II.

Resource author

Joanna Beza-Bojanowska, Ronald MacDonald

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/26613

Resource license

Adapt according to the presented license agreement and reference the original author.