Visovian is right. It would be good to study the ATmega88 datasheet to understand how PWM works.
Do you need PWM or is generating a square wave or different frequencies(constant 50% duty cycle) going to work?
Or to put it another way what is the signal that you need to generate? How much resolution do you need? What is the most narrow and widest pulse width that you need to generate?
To generate a 200kHz signal with 8 bit resolution you would need a clock of 51.2MHz!
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