This study has analysed the misalignment of the real exchange rates of the eleven original euro members at the introduction of the euro, and their consequences for inflation in the first five and ten years of the monetary union. Using four separate models of real equilibrium exchange rates, the largest overvaluations are found for Portugal and Germany, and the largest undervaluations are found for Ireland and Finland. In accordance with theory, adjustment towards equilibrium through inflation rate differentials seems to have occurred: the effect being clear with regard to two of the models, and ambiguous according to the two remaining. The study sheds light on the appropriateness of the conversion rates at the introduction of the euro in 1999, and the macroeconomic consequences of real exchange rate misalignment.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:uu-522185 |
| Date | January 2024 |
| Creators | Bergman, Albert |
| Publisher | Uppsala universitet, Nationalekonomiska institutionen |
| Source Sets | DiVA Archive at Upsalla University |
| Language | Swedish |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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