@article{Frait:269459,
      recid = {269459},
      author = {Frait, Jan and Komarek, Lubos},
      title = {Theoretical and empirical analysis of the debt-adjusted  real exchange rate in selected transition economies during  1994 - 2001},
      address = {2002-08-08},
      number = {2068-2018-1380},
      pages = {34},
      year = {2002},
      abstract = {This paper aims to enrich the debate on the  overvaluation/undervaluation of the Czech koruna and the  currencies of other selected transition economies by  applying the concept of the debt-adjusted real exchange  rate (DARER), thereby offering monetary policy makers  another indicator for more responsive management of this  important economic variable. The motivation for  constructing DARER is the fact that many transition  economies finance their long-term current account deficits  with capital flows, which often leads to real overvaluation  of their currencies. DARER can signal to the authorities  that the real exchange rate is becoming unsustainable in  the medium term and that if this signal is ignored, a  currency crisis may ensue. The paper is in seven parts. The  first three parts contain the theoretical underpinning of  the concept. Part four defines newly proposed indicators of  exchange rate overvaluation. Part five contains empirical  DARER results for the Czech Republic. Part six and annex 1  to this work contain empirical DARER results for selected  transition countries, including a brief description of  those countries’ exchange rate histories. The final part  examines the possibilities and limitations of the DARER  concept in practice. The primary aim of this part, however,  is to explain the information content of the real exchange  rate as a very good warning signal of potential currency  crisis.},
      url = {http://ageconsearch.umn.edu/record/269459},
      doi = {https://doi.org/10.22004/ag.econ.269459},
}