Working paper

Real effective exchange rates for 178 countries: a new database

Using data on exchange rates and consumer price indices and a weighting matrix, we calculate up-to-date consumer price index-based REER (the real effe

Publishing date
15 March 2012
Authors
Zsolt Darvas

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The real effective exchange rate (REER), which measures the development of the real value of a country’s currency against the basket of the trading partners of the country, is a frequently used variable in both theoretical and applied economic research and policy analysis. It is used for a wide variety of purposes, such as assessing the equilibrium value of a currency, the change in price or cost competitiveness, the drivers of trade flows, or incentives for reallocation production between the tradable and the non-tradable sectors.

Due to the importance of the REER in economic research and policy analysis, several institutions, such as the World Bank, the Eurostat, the BIS, the OECD, just to name a few, publish various REER indicators which are freely downloadable. Altogether, these institutions publish data for 113 countries. The countries for which data are available include all advanced and several emerging and developing countries. However, different databases may have different methodologies and even the 109 countries included in the World Bank database miss several dozen countries of the world.

Our database has three novelties:

  1. Using a consistent methodology, we calculate CPI-based REER for 178 countries (plus the euro area) for annual data and for 153 countries (plus the euro area) for monthly data.
  2. We calculate the REER for all countries up to date, eg in the current vintage of the database we calculate up to January 2012.
  3. It is relatively easy to calculate REER against any arbitrary group of countries – what is needed for this is a re-scaling of the weighting matrix.

The database will be irregularly updated.

About the authors

  • Zsolt Darvas

    Zsolt Darvas is a Senior Fellow at Bruegel and part-time Senior Research Fellow at the Corvinus University of Budapest. He joined Bruegel in 2008 as a Visiting Fellow, and became a Research Fellow in 2009 and a Senior Fellow in 2013.

    From 2005 to 2008, he was the Research Advisor of the Argenta Financial Research Group in Budapest. Before that, he worked at the research unit of the Central Bank of Hungary (1994-2005) where he served as Deputy Head.

    Zsolt holds a Ph.D. in Economics from Corvinus University of Budapest where he teaches courses in Econometrics but also at other institutions since 1994. His research interests include macroeconomics, international economics, central banking and time series analysis.

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