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Real Exchange Rate Productivity And The Terms Of Trade
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Book Synopsis Terms of Trade, Productivity, and the Real Exchange Rate by : Jose De Gregorio
Download or read book Terms of Trade, Productivity, and the Real Exchange Rate written by Jose De Gregorio and published by . This book was released on 1994 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper examines the effects of terms of trade movements and productivity differentials across sectors on the behavior of the real exchange rate. We develop a simple model of a small open economy producing exportable and nontradable goods and consuming importable and nontradable goods and present empirical evidence for a sample of fourteen OECD countries. The evidence broadly supports the predictions of the model, namely that faster productivity growth in the tradable relative to the nontradable sector and an improvement in the terms of trade induce a real appreciation.
Book Synopsis Real Exchange Rate, Productivity, and the Terms of Trade by : Maxym Chaban
Download or read book Real Exchange Rate, Productivity, and the Terms of Trade written by Maxym Chaban and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Real Exchange Rate, Productivity, and the Terms of Trade by :
Download or read book Real Exchange Rate, Productivity, and the Terms of Trade written by and published by . This book was released on 2002 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The theoretical literature assumes that real variables affect the real exchange rate only through the relative price of nontraded goods. In Chapter 2. I decompose the real Canada-US exchange rate into the relative prices of traded goods and nontraded goods and analyze how real shocks affect these two relative prices. I find that shocks to productivity and commodity prices affect the real exchange rate almost entirely through the relative price of traded goods. This evidence calls for explicit modeling of the transmission mechanism from real shocks to the real exchange rate through the relative price of traded goods. In Chapter 3. I develop a model that allows the relative price of traded goods to play a role in the transmission mechanism. The model is a generalization of the basic Balassa-Samuelson model that incorporates terms-of-trade and productivity shocks in a unified framework. The generalization is parsimonious since it maintains the law of one price for each traded good. However, the model does not have the law of one price for the composite traded good. This is necessary to allow traded goods to act as a channel in the transmission mechanism. The model implies that domestic productivity shocks depreciate the relative price of tradables, while shocks to world commodity prices appreciate it. The empirical analysis provides some support for the first prediction, but rejects the second prediction. In Chapter 4. I analyze whether the depreciation of the real Canada-US exchange rate can be a driving force behind the widening of the Canada-US productivity gap in manufacturing since the 1980s. I focus on the factor cost hypothesis. that states that a real exchange rate depreciation can make capital relatively more expensive than labour, causing manufacturing firms to adopt more labour intensive technologies. Using a Vector Error Correction Model. I find that a real depreciation of the Canadian dollar reduces the relative Canada-US capital-labour ratio and labour pr.
Book Synopsis Fundamental Determinants of Exchange Rates by : Jerome L. Stein
Download or read book Fundamental Determinants of Exchange Rates written by Jerome L. Stein and published by Oxford University Press. This book was released on 1997 with total page 276 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This book greatly enhances our understanding of the behavior of real exchange rates. It provides an elegant model based on a solid theoretical foundation that links real exchange rates to their fundamental economic determinants and takes proper account of stock and flow considerations. The authors provide a masterful account of how changes in productivity and thrift affect the real exchange rate, and show that the long-run impact depends crucially on whether the change reflects the former fundamental (investment) or the latter (consumption). The empirical implementation uses state-of-the-art cointegration and error correction methodologies that are eminently well suited to capture the short-run adjustment of the real exchange rate to its medium- to long-run equilibrium value. The empirical results are extremely encouraging, as the economic fundamentals identified by the authors can explain a substantial part of the movement in the real exchange rate of a number of countries."--Peter Clark, International Monetary Fund
Book Synopsis Real Exchange Rate Levels, Productivity and Demand Shocks by : Menzie David Chinn
Download or read book Real Exchange Rate Levels, Productivity and Demand Shocks written by Menzie David Chinn and published by International Monetary Fund. This book was released on 1997-05-01 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the long-run relationship between the real exchange rate, traded and nontraded productivity levels, and government spending for 14 OECD countries, using recently developed panel cointegration tests. The results indicate that under certain assumptions it is easier to detect cointegration in panel data than in the available time series; moreover, the rate of reversion to long-run equilibrium is estimated with greater precision. Using the model augmented by oil prices, we find that in 1991 (the last year productivity data are available) there is less overvaluation of the U.S. dollar than that implied by a naive version of purchasing power parity.
Book Synopsis Estimating the Equilibrium Real Exchange Rate by : Mr.Tarhan Feyzioglu
Download or read book Estimating the Equilibrium Real Exchange Rate written by Mr.Tarhan Feyzioglu and published by International Monetary Fund. This book was released on 1997-09-01 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: An equilibrium exchange rate is here defined as the level that is consistent with simultaneous internal and external balances as specified in Montiel (1996). Exogenous “fundamental” variables determining these balances are identified. Along the lines of Edwards (1994), a reduced form is estimated with the cointegration technique for Finland for the period 1975-95. The estimation produced a reasonable set of equilibrium exchange rates that appreciate with positive shocks to the terms of trade, world real interest rates, and the productivity differential between Finland and its trading partners.
Book Synopsis Real Exchange Rates and Fundamentals by : Luca Antonio Ricci
Download or read book Real Exchange Rates and Fundamentals written by Luca Antonio Ricci and published by International Monetary Fund. This book was released on 2008 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper employs newly constructed measures for productivity differentials, external imbalances, and commodity terms of trade to estimate a panel cointegrating relationship between real exchange rates and a set of fundamentals for a sample of 48 industrial countries and emerging markets. It finds evidence of a strong positive relation between the CPI-based real exchange rate and commodity terms of trade. The estimated impact of productivity growth differentials between traded and nontraded goods, while statistically significant, is small. Increases in net foreign assets and in government consumption tend to be associated with appreciating real exchange rates.
Book Synopsis Long-Run Determinants of the Real Exchange Rate by : Mr.Hamid Faruqee
Download or read book Long-Run Determinants of the Real Exchange Rate written by Mr.Hamid Faruqee and published by International Monetary Fund. This book was released on 1994-08-01 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the long-run determinants of the real exchange rate from a stock-flow perspective. The empirical analysis estimates a long-run relationship between the real exchange rate, net foreign assets and other factors affecting trade flows. Using postwar data for the United States and Japan, cointegration analysis supports the finding that the structural factors underlying each country’s net trade and net foreign asset positions determine the long-run path for the real value of the dollar and the yen. The empirical analysis also provides estimates for the underlying stochastic trend in each real exchange rate series.
Book Synopsis Terms of Trade, Productivity, and the Real Exchange Rate by : Jose de Gregorio
Download or read book Terms of Trade, Productivity, and the Real Exchange Rate written by Jose de Gregorio and published by . This book was released on 2010 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper examines the effects of terms of trade movements and productivity differentials across sectors on the behavior of the real exchange rate. We develop a simple model of a small open economy producing exportable and nontradable goods and consuming importable and nontradable goods and present empirical evidence for a sample of fourteen OECD countries. The evidence broadly supports the predictions of the model, namely that faster productivity growth in the tradable relative to the nontradable sector and an improvement in the terms of trade induce a real appreciation.
Book Synopsis Real Exchange Rates In Developing Countries by : Mr.Mohsin S. Khan
Download or read book Real Exchange Rates In Developing Countries written by Mr.Mohsin S. Khan and published by International Monetary Fund. This book was released on 2004-10-01 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: There is little empirical research on whether Balassa-Samuelson effects can explain the long-run behavior of real exchange rates in developing countries. This paper presents new evidence on this issue based on a panel data sample of 16 developing countries. The paper finds that the traded-nontraded productivity differential is a significant determinant of the relative price of nontraded goods, and the relative price in turn exerts a significant effect on the real exchange rate. The terms of trade also influence the real exchange rate. These results provide strong verification of Balassa-Samuelson effects for developing countries.
Book Synopsis Productivity, the Terms of Trade, and the Real Exchange Rate by : Ehsan U. Choudhri
Download or read book Productivity, the Terms of Trade, and the Real Exchange Rate written by Ehsan U. Choudhri and published by . This book was released on 2009 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis What Determines Real Exchange Rates? The Long and Short of it by : Mr.Ronald MacDonald
Download or read book What Determines Real Exchange Rates? The Long and Short of it written by Mr.Ronald MacDonald and published by International Monetary Fund. This book was released on 1997-02-01 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a reduced-form model of the real exchange rate. Using multilateral cointegration methods, the model is implemented for the real effective exchange rates of the dollar, the mark, and the yen, over the period 1974-1993. In contrast to much other research using real exchange rates, there is evidence of significant and sensible long-run relationships for a simplified version as well as for the full version of the model. The estimated long-run relationships are used to produce dynamic equations, which outperform a random walk and produce sensible dynamic patterns in the context of an impulse response analysis.
Book Synopsis Productivity, the Terms of Trade, and the Real Exchange Rate by : Ehsan U. Choudhri
Download or read book Productivity, the Terms of Trade, and the Real Exchange Rate written by Ehsan U. Choudhri and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Real Exchange Rates and the Prices of Nontradable Goods by : Mr.Gian Milesi-Ferretti
Download or read book Real Exchange Rates and the Prices of Nontradable Goods written by Mr.Gian Milesi-Ferretti and published by International Monetary Fund. This book was released on 1994-02-01 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper attempts to provide a perspective on real exchange rate developments following the inception of the EMS. The focus is on structural determinants of real exchange rates, notably the behavior of tradables and nontradable prices and productivity. It is found that changes in the relative price of tradable goods in terms of nontradables account for a sizable fraction of real exchange rate dynamics during the EMS period. Sectoral productivity growth differential help explain the behavior of the relative price of tradable goods, especially in the long run. There is also some evidence that the EMS has extended on relative price behavior.
Book Synopsis Real Exchange Rates and Competitiveness by : Mr.Leslie Lipschitz
Download or read book Real Exchange Rates and Competitiveness written by Mr.Leslie Lipschitz and published by International Monetary Fund. This book was released on 1991-03 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines indicators of competitiveness. It analyzes the conceptual foundations of conventional measures of the real exchange rate and finds that inferences about competitiveness from these indicators require strong, and in many cases implausible, assumptions. Based on this analysis some alternative measures are proposed and their use is illustrated using data from Europe. Given the usefulness of standardized indicators, four simple charts are proposed; these help solve some conundrums in the European data and provide the basis for a richer set of inferences about competitiveness.
Book Synopsis Terms of trade, productivity and the real exchange rates by : José de Gregorio
Download or read book Terms of trade, productivity and the real exchange rates written by José de Gregorio and published by . This book was released on 1994 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Real Exchange Rates, Economic Complexity, and Investment by : Steve Brito
Download or read book Real Exchange Rates, Economic Complexity, and Investment written by Steve Brito and published by International Monetary Fund. This book was released on 2018-05-10 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: We show that the response of firm-level investment to real exchange rate movements varies depending on the production structure of the economy. Firms in advanced economies and in emerging Asia increase investment when the domestic currency weakens, in line with the traditional Mundell-Fleming model. However, in other emerging market and developing economies, as well as some advanced economies with a low degree of structural economic complexity, corporate investment increases when the domestic currency strengthens. This result is consistent with Diaz Alejandro (1963)—in economies where capital goods are mostly imported, a stronger real exchange rate reduces investment costs for domestic firms.
