Given that RER misalignment and, in particular overvaluation, can undermine the country's export-oriented development strategy, the equilibrium RER measurement is crucial for policymakers. Unfortunately, this variable cannot be observed. The most common method in order to estimate the equilibrium RER is the universally accepted Purchasing Power Parity (PPP) theory, according to which the RER equilibrium level is assumed to remain constant over time. Nevertheless, the equilibrium RER is not a fixed value as it follows the trend of key economic fundamentals, such as different monetary and fiscal policies or asymmetrical shocks between the home country and abroad. Consequently, the PPP doctrine has been largely debated during the years, given that it may signal a natural RER movement towards its new equilibrium as a RER misalignment.