Given recent developments in Iceland, this paper evaluates its real exchange rate disequilibrium. It discusses three approaches to estimating the equilibrium values and suggests that the adjustment needed to bring the real exchange rate in line with fundamentals is in the range of 15-25 percent, although timing and manner of this adjustment is unclear.
This Selected Issues paper examines the external sector issues in Hungary. It looks at some traditional indicators of external competitiveness, and provides basic background on key macroeconomic developments, including the current account and its financing. The paper examines various measures of the real effective exchange rate, the labor market considerations, and actual export performance. The paper concludes that although external competitiveness of the Hungarian economy has not been permanently impaired and the country is doing well from various vantage points, a significant dent has been put in competitiveness.
This Selected Issues paper analyzes the current account performance of Denmark in 1993–98. The paper presents a brief review of structural features of the external current account. It looks at the decline in export market share and concludes that it reflects primarily cyclical factors and the unwinding of an unsustainable export market gain immediately after the German unification. The paper also examines implications for fiscal policy of Denmark’s decision to remain for the time being outside the European Monetary Union.