Abstract:European monetary integration is causing economic imbalances because the optimal currency area criterion is not being properly met. Euro countries are experiencing chronic current account deficits. The purpose of this study is to explore the long-running divergent dynamics of real exchange rates and their determinants and influence.
In this estimation, we find that the real effective exchange rate (REER) has a long term equilibrium relation to the balance of current account, the demographic aging effect, and t… Show more
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