Is the exchange rate of MK denar in Republic of Macedonia real or overvalued?
Is the exchange rate of MK denar in Republic of Macedonia real or overvalued?

Summary/Abstract: The choice of exchange rate regime and determination of the value of the national currency is vital for monetary and economic policy. The classic distinction of fixed versus flexible exchange rate is an overly simplified method for selection of the exchange regime. The same applies to the thesis that the value of the domestic currency is determined by supply and demand in the foreign exchange market. Despite the great interest in the growth and development of the economy as a whole, the issue of exchange rate becomes more tangible: there is neither consensus on fundamental factors that determine the stability of the exchange rate, nor on how to measure its deviation from the long-run equilibrium level. This paper deals with the question “how real is the sxchange rate of the denar in the Republicc of Macedonia?”. The aim of the paper is to provide assessment if MK denar has been real of overevaluated in the period 2000-2011. In that purpose, several econometric methods were used, such as: simple statistical analysis and dynamic analisys of real effective exchange rate regarding the equilibrium real exchange rate. These methods have shown that MK Denar is real.Several econometric methods were used in this paper, such as: simple statistical analysis and dynamic analysis of real effective exchange rate regarding the equilibrium real exchange rate. These methods show that MK Denar is real.

• Details
• Contents