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The Impact of Capital Flows on the Real Exchange Rate: the Case of Romania

Author

Listed:
  • Roman Angela

    („Alexandru Ioan Cuza” University of Iasi, Romania Faculty of Economics and Business Administration)

  • Ghita-Mitrescu Silvia

    („Ovidius” University from Constanta)

  • Sadoveanu Diana

    („Alexandru Ioan Cuza” University of Iasi, Romania Faculty of Economics and Business Administration)

Abstract

This paper examines the influence of the capital flows on the real exchange rate of the Romanian leu against euro. Many studies which are analysing the fundamental determinants of the exchange rate of the leu, show that the appreciation of the currency, before the financial crises from the last years, was due to the real convergence of the Romanian economy. In our study we have showed that the capital account contributed to the appreciation of the leu, rather than the influence of the Harrod-Balassa-Samuelson effect. We found a long-run relationship among the real exchange rate, foreign direct investments and workers remittances from abroad

Suggested Citation

  • Roman Angela & Ghita-Mitrescu Silvia & Sadoveanu Diana, 2014. "The Impact of Capital Flows on the Real Exchange Rate: the Case of Romania," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 188-193, May.
    • Handle: RePEc:ovi:oviste:v:xiv:y:2014:i:1:p:188-193
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    More about this item

    Keywords

    Capital flows; real exchange rate; Harrod-Balassa-Samuelson effect; Johansen cointegration;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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