Advanced Search
MyIDEAS: Login to save this article or follow this journal

The Sources of Real Exchange Rate Fluctuations in India

Contents:

Author Info

  • Tomoe Moore

    (Department of Economics, Finance and Accounting, Coventry University, Coventry, CV1 5FB, England)

  • Eric J. Pentecost

    (Department of Economics, Loughborough University, Loughborough, Leicestershire, LE11 3TU, England.)

Abstract

This paper examines the contributions of real (permanent) and nominal (temporary) shocks on the nominal and real exchange rates of the Indian Rupee against the US dollar in the period since 1993, using the long-run structural VAR technique. If nominal shocks account for most of the movement in the real exchange rate then the authorities can use monetary policy to influence the competitiveness of the economy. On the other hand, if real shocks account for most of the variation in the real exchange rate the Purchasing Power Parity (PPP) hypothesis is invalid and monetary policy ineffective as a tool of exchange rate management. The paper finds that the real exchange rate of the Rupee against the US dollar is non-stationary and that real shocks have permanent effects on the exchange rate, thus making exchange rate management at best futile and possibly harmful to the economy.

Download Info

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Bibliographic Info

Article provided by Department of Economics, Delhi School of Economics in its journal Indian Economic Review.

Volume (Year): 41 (2006)
Issue (Month): 1 (July)
Pages: 9-23

as in new window
Handle: RePEc:dse:indecr:v:41:y:2006:i:1:p:9-23

Contact details of provider:
Postal: University of Delhi, Delhi 110 007
Phone: 91-11-2766-6533/34/35, 2766-6703/04/05
Fax: +91-11-7667159
Email:
Web page: http://www.ierdse.org/
More information through EDIRC

Order Information:
Email:
Web: http://www.ierdse.org/

Related research

Keywords: Structural VAR model; the real exchange rate; permanent and transitory shocks; India;

Find related papers by JEL classification:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Takeshi Inoue & Shigeyuki Hamori, 2009. "What Explains Real and Nominal Exchange Rate Fluctuations?: Evidence from SVAR Analysis for India," Economics Bulletin, AccessEcon, vol. 29(4), pages 2803-2815.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:dse:indecr:v:41:y:2006:i:1:p:9-23. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Pami Dua).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.