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Misalignment of Real Exchange Rate with its Equilibrium Path: Case of Pakistan

Author

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  • Shah Hussain

    (State Bank of Pakistan)

Abstract

This study estimates the effects of fundamental factors on real exchange rate, determines the path of equilibrium real exchange rate on the basis of sustainable levels of fundamentals and identifies the sources of misalignment. It is found that the real exchange rate has remained historically overvalued in Pakistan. The major factors behind it have been capital inflows and public expenditures.

Suggested Citation

  • Shah Hussain, 2009. "Misalignment of Real Exchange Rate with its Equilibrium Path: Case of Pakistan," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 5, pages 1-14.
    • Handle: RePEc:sbp:journl:39
    as

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    File URL: http://www.sbp.org.pk/research/bulletin/2009/Vol5No.2/ShahHussain.pdf
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    References listed on IDEAS

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    Cited by:

    1. Guzin BAYAR & Selman TOKPUNAR, 2013. "Turk Lirasi Reel Kuru Denge Degerinde Mi?," Ege Academic Review, Ege University Faculty of Economics and Administrative Sciences, vol. 13(4), pages 405-426.

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    More about this item

    Keywords

    fundamentals; real exchange rate; misalignment;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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