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Real exchange rates in emerging economies |
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| Authors: | Jan Brůha Jiří Podpiera |
| Affiliation: | 1. External Economic Relations Division, Czech National Bank, Czech Republic;2. and The Center for Economic Research and Graduate Education of University, Charles and the Economic Institute of the Academy of Sciences, Prague, Czech Republic. E‐mails: jan_bruha@yahoo.co.uk;3. jan.bruha@cnb.cz;4. External Economic Relations Division, Czech National Bank, Czech Republic. E‐mail: jiri.podpiera@cnb.cz |
| Abstract: | We analyse the role of various investment margins in explaining the real exchange rate appreciation recorded in European transition countries. We present a model that introduces a quality investment margin and show that the margin is needed for replicating the observed pace of real exchange rate appreciation. |
| Keywords: | F12 F36 F41 Real exchange rate emerging economies two‐country modelling |