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Effective Exchange Rate (effective + exchange_rate)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	88%

Kinds of Effective Exchange Rate

real effective exchange rate

Selected Abstracts

The Impact of Trade and Exchange-rate Policy Reforms on North African Manufactured Exports

DEVELOPMENT POLICY REVIEW, Issue 2 2002
Khalid Sekkat
Three indicators capture the impact of exchange-rate policy in fostering manufactured exports from North Africa: changes in the real effective exchange rate (REER), its volatility, and its misalignment. The impact of trade policy is examined using a trade liberalisation indicator. Export supply equations are estimated for three manufacturing industries: textiles, chemicals, and food. The results suggest that trade and exchange-rate policies matter for export performance, as is evidenced by the negative influence exerted independently by real exchange-rate misalignment and volatility and by the positive influence of trade liberalisation. [source]

International tourism and economic development in South Africa: a Granger causality test

INTERNATIONAL JOURNAL OF TOURISM RESEARCH, Issue 2 2010
Oludele A. Akinboade
Abstract One of the major objectives of macroeconomic policies in many developing countries is sustained economic growth, and South Africa has been striving to achieve and maintain this in various ways. One of these is through international tourism. Although international tourism contributes to the growth of many economies, it is in turn, impacted by growth in many developed countries. Real gross domestic product (GDP), international tourism earnings, real effective exchange rate and exports were analysed within a multivariate vector auto regressive model using annual data covering 1980,2005. The main focus of this study therefore was to demonstrate the direction of causality between international tourism earnings and long-run economic growth of South Africa, among other variables, using Granger causality analysis. The result obtained showed a unidirectional causality running from international tourism earnings to real GDP, both in the short run and in the long run. The error correction mechanism carried out also supported this causality. Copyright © 2009 John Wiley & Sons, Ltd. [source]

A Stochastic Measure of International Competitiveness,

INTERNATIONAL REVIEW OF FINANCE, Issue 1-2 2009
KENNETH W. CLEMENTS
ABSTRACT Government agencies produce indexes that purport to measure international competitiveness. The most common version is the real effective exchange rate, which is some form of weighted average of the real exchange rates of the country's trading partners. Such indexes convey a false sense of accuracy as they ignore the volatility among the component real exchange rates of the partners. As long as all real rates do not move in an equiproportionate fashion, in a fundamental sense real effective exchange rates are subject to estimation uncertainty. We demonstrate how this uncertainty can be measured and used to enhance current practice. [source]

CHINA'S EQUILIBRIUM REAL EXCHANGE RATE: A COUNTERFACTUAL ANALYSIS

PACIFIC ECONOMIC REVIEW, Issue 1 2008
Rod Tyers
The absence of secondary indices of import and export prices necessitates their construction from trade data. Some undervaluation is suggested in the lead-up to and during the financial crisis, due in part to an extraordinary accumulation of foreign reserves following exchange rate integration in 1994. If, instead, China had run a more typical trade balance prior to the crisis its real effective exchange rate would have been higher by about a tenth. [source]

Monetary Policy Reaction Functions in Australia,

THE ECONOMIC RECORD, Issue 253 2005
GORDON De BROUWER
Interest-rate functions are estimated to assess the stability of Australian monetary policy in the post-float period. The results indicate that the Reserve Bank of Australia (RBA) is forward-looking, focusing on outcomes 1 year ahead. The weight on inflation in the RBA reaction function has increased, and that on output has decreased, since inflation targeting. This is robust to various definitions of the output gap. The RBA also appears to take modest account of sustained movements in the effective exchange rate. Point estimates of the implied neutral rate of interest are from 5 to 5½ per cent. [source]

Assessing the Equilibrium Exchange Rate of the Malaysian Ringgit: A Comparison of Alternative Approaches

ASIAN ECONOMIC JOURNAL, Issue 2 2008
Isabell Koske
F3; F31; F32 Drawing on the behavioral equilibrium exchange rate and the fundamental equilibrium exchange rate approaches, this paper assesses the equilibrium value of the real effective exchange rate of the Malaysian ringgit over the past 25 years. For 2005, when the Malaysian authorities exited from the peg with the US dollar, both models determine a slight undervaluation of the currency. Openness and real GDP per capita have been the main drivers of real exchange rate movements in the past, although non-tradable productivity, government consumption, and net foreign assets have also had a sizable impact. The paper also highlights the limitations of applying the two approaches in the context of emerging countries. [source]

The Effect of Exchange Rate on Bilateral Trade Balance: New Evidence from Malaysia and Thailand

ASIAN ECONOMIC JOURNAL, Issue 3 2001
Ahmad Zubaidi BaharumshahArticle first published online: 18 DEC 200
This paper attempts to identify the major economic factors that influence the bilateral trade balances of Malaysia and Thailand with the US and Japan. To this end, an unrestricted VAR model was estimated using quarterly frequency data from 1980: I to 1996: IV. The Johansen results indicate a stable long-run relation between trade and three macro variables: exchange rate, domestic income and foreign income. The main findings of this paper are: (i) the real effective exchange rate is an important variable in the trade balance equation and devaluation improves the trade balances of both economies in the long-run; (ii) the other important variables that determine trade balance include domestic and foreign incomes; (iii) the results indicate no J-curve effect and causal run from exchange rate to trade balance, (iv) the real effects of devaluation are distributed over a period of eight to nine quarters. [source]

Exchange Rate Pass-through in China

CHINA AND WORLD ECONOMY, Issue 1 2009
Chang Shu
E31; F31; F32 Abstract During the second half of 2007 and early part of 2008 when there were intense inflationary pressures in China, RMB appreciation was advocated as a means of helping to curb inflation. The effectiveness of appreciation in controlling inflation depends on the impact of exchange rate movements on import and domestic prices. Our analysis finds fairly large and speedy exchange rate pass-through (ERPT) to import prices: 50 and 60 percent for the short run and long run, respectively. However, the degree of ERPT decreases along the price chain from upstream to downstream prices. ERPT for consumer prices, the most downstream prices, is much milder and has substantial lags. A 10-percent rise in the nominal effective exchange rate will dampen consumer prices by 1.1 percent within a year, with very little pass-through in the first half year, and by 2.0 percent over the long run. These findings, particularly the ERPT to consumer prices, suggest that RMB appreciation can help to reduce inflationary pressures over the longer term. However, it is unlikely to provide rapid relief to the current round of high inflation because of the long lags in ERPT. The RMB needs to strengthen in effective terms to exert the desired dampening impact on prices. [source]