Eurozone needs structural reforms to realign real exchange rates – Italian paper

Real exchange rate misalignments persist for longer in eurozone, researchers say

European Union flags

The creation of the European single currency may have caused misalignments of its real exchange rate to last longer than similar problems with other currencies, a research paper published by the Bank of Italy argues.

In Real exchange rate misalignments in the euro area, Michael Fidora, Claire Giordano and Martin Schmitz use a behavioural equilibrium exchange rate, or Beer model, building on a 1998 paper by Peter Clark and Ronald MacDonald. This estimates the overvaluation of a country’s

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