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
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- Michael B. Devereux & Philip R. Lane, 2002.
"Understanding Bilateral Exchange Rate Volatility,"
Trinity Economics Papers
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- Sayeeda Bano, 2010. "ASEAN-New Zealand Trade Relations and Trade Potential," Working Papers in Economics 10/01, University of Waikato, Department of Economics.
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