Non-stationary Real Exchange Rates of Tradable and Non-tradable Goods in the European Monetary Union

This study analyzes the time series behavior of the real exchange rates based on the Harmonized Index of Consumer Prices and various of its sub-components for tradable and non-tradable goods and services between the member states of the European Monetary Union. Country pair specific tests show that the real exchange rates are typically random walks and their components are in general not cointegrated. Real exchange rates of tradable goods do not display a systematically different time series behavior than the real exchange rates of non-tradable services