On openness and real exchange rate volatility
AbstractWe address the puzzle concerning the inverse relationship between openness and real exchange rate volatility. We argue that the relationship can be explained by increased openness facilitating purchasing power parity. Using New Zealand data, we show that increased openness prolongs real exchange regimes characterised by fast mean-reversion and low volatility.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 6 (2008)
Issue (Month): 14 ()
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Find related papers by JEL classification:
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- F1 - International Economics - - Trade
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michael Bleaney, 2008. "Openness and Real Exchange Rate Volatility: In Search of an Explanation," Open Economies Review, Springer, Springer, vol. 19(2), pages 135-146, April.
- Alba, Joseph D. & Papell, David H., 2007. "Purchasing power parity and country characteristics: Evidence from panel data tests," Journal of Development Economics, Elsevier, Elsevier, vol. 83(1), pages 240-251, May.
- Devereux, M.B. & Lane, P.R., 2002.
"Understanding Bilateral Exchange Rate Volatility,"
CEG Working Papers, Trinity College Dublin, Department of Economics
20025, Trinity College Dublin, Department of Economics.
- Michael B. Devereux & Philip R. Lane, 2002. "Understanding Bilateral Exchange Rate Volatility," Trinity Economics Papers, Trinity College Dublin, Department of Economics 200211, Trinity College Dublin, Department of Economics.
- Devereux, Michael B & Lane, Philip R., 2002. "Understanding Bilateral Exchange Rate Volatility," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3518, C.E.P.R. Discussion Papers.
- Hau, Harald, 2002.
"Real Exchange Rate Volatility and Economic Openness: Theory and Evidence,"
Journal of Money, Credit and Banking, Blackwell Publishing,
Blackwell Publishing, vol. 34(3), pages 611-30, August.
- Hau, Harald, 2000. "Real Exchange Rate Volatility and Economic Openness: Theory and Evidence," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2356, C.E.P.R. Discussion Papers.
- Sayeeda Bano, 2010. "ASEAN-New Zealand Trade Relations and Trade Potential," Working Papers in Economics, University of Waikato, Department of Economics 10/01, University of Waikato, Department of Economics.
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