Australia's Medium-Run Exchange Rate: A Macroeconomic Balance Approach
AbstractThe determinants of Australia's exchange rate based on the internal-external balance approach introduced by Williamson (1983) were analysed. Internal balance implies that the economy is operating at supply potential with no inflationary pressures. External balance is characterised as the sustainable net flow of resources (corresponding to a current account to gross domestic product ratio) between countries in internal balance. After estimating a disaggregated trade model for Australia, estimates of the medium-term exchange rate associated with a given current account position were provided. These estimates, however, vary considerably through time because of variations in key parameters. Copyright 2005 The Economic Society Of Australia.
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Bibliographic InfoArticle provided by The Economic Society of Australia in its journal The Economic Record.
Volume (Year): 81 (2005)
Issue (Month): 253 (06)
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Other versions of this item:
- Nikola Dvornak & Marion Kohler & Gordon Menzies, 2003. "Australia’s Medium-run Exchange Rate: A Macroeconomic Balance Approach," RBA Research Discussion Papers rdp2003-03, Reserve Bank of Australia.
- F31 - International Economics - - International Finance - - - Foreign Exchange
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
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