Competitiveness in Bulgaria: An Assessment of the Real Effective Exchange Rate

25 Pages Posted: 12 Feb 2006

See all articles by Dimitar Chobanov

Dimitar Chobanov

affiliation not provided to SSRN

Piritta Sorsa

International Monetary Fund (IMF)

Date Written: March 2004

Abstract

This paper presents an empirical analysis of the medium and long-term determinants of the real (effective) exchange rate (RER) of the Bulgarian lev using elements from the natural real exchange rate (NATREX) and the behavioral equilibrium exchange rate (BEER) approaches. The results indicate that the RER is driven by fundamentals, including labor productivity, terms of trade, world real interest rates, gross savings, and foreign direct investment. The model also shows that there is no significant misalignment of the Bulgarian lev.

Keywords: Real effective exchange rates, Fundamental determinants, NATREX, BEER, Bulgaria, Competitiveness

JEL Classification: F31, F41

Suggested Citation

Chobanov, Dimitar and Sorsa, Piritta, Competitiveness in Bulgaria: An Assessment of the Real Effective Exchange Rate (March 2004). IMF Working Paper No. 04/37, Available at SSRN: https://ssrn.com/abstract=878860

Dimitar Chobanov (Contact Author)

affiliation not provided to SSRN ( email )

Piritta Sorsa

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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