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Estimating the equilibrium real exchange rate in Venezuela

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  • Hilde Bjørnland

    (University of Oslo)

Abstract

To determine whether the real exchange rate is misaligned with respect to its long-run equilibrium is an important issue for policy makers. This paper clarifies and calculates the concept of the equilibrium real exchange rate, using a structural vector autoregression (VAR) model. By imposing long-run restrictions on a VAR model for Venezuela, four structural shocks are identified: Nominal demand, real demand, supply and oil price shocks. The identified shocks and their impulse responses are consistent with an open economy model of economic fluctuations and highlight the role of the exchange rate in the transmission mechanism of an oil-producing country.

Suggested Citation

  • Hilde Bjørnland, 2004. "Estimating the equilibrium real exchange rate in Venezuela," Economics Bulletin, AccessEcon, vol. 6(6), pages 1-8.
    • Handle: RePEc:ebl:ecbull:eb-04f30003
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    References listed on IDEAS

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    Cited by:

    1. Mehrara, Mohsen & Oskoui, Kamran Niki, 2007. "The sources of macroeconomic fluctuations in oil exporting countries: A comparative study," Economic Modelling, Elsevier, vol. 24(3), pages 365-379, May.
    2. HSING, Yu, 2006. "Determinants Of Exchange Rate Fluctuations For Venezuela: Application Of An Extended Mundell-Fleming Model," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 6(1).

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