Secondly, the
real equilibrium exchange rate as determined via relative prices of tradables versus non-tradables, as well as via labour unit cost produces comparable results and might be viewed as closer proxies for the real exchange rate.
Calculating the Real Equilibrium Exchange Rate of the Dollar
Thus, if the relative price between internationally traded and nontraded goods and services is rising compared to other countries, this tendency reflects lower productivity growth in the export sector than in other countries, weakening the real equilibrium exchange rate.
Because of this development and the continuing decline in the US net foreign position, the long-term real equilibrium exchange rate weakened further during the same period (see Diagrams 51 and 52).
If the entry rate is not inflationary or deflationary, it probably represents the
real equilibrium exchange rate.
The weak tendency since the mid-1990s should therefore have contributed to a depreciation of the real equilibrium exchange rate during the period.
Lindberg, "Kronans reala jamviktskurs (The Real Equilibrium Exchange Rate of the Krona)", Penning och valutapolitik (Monetary and Foreign Exchange Policy), 1996:1, pp.
Secondly, giving the recent EAC political compromise to stabilish a single currency area by 2024, (2) this work evaluates the differences between estimated and
real equilibrium exchange rates in the region.