On the relationship between exchange rates and external imbalances: East and Southeast Asia
AbstractThe role the real exchange rate plays in determining current account balances has gathered momentum as East and Southeast Asian countries have seen increasingly positive current account balances. This paper analyses the evolution of current accounts in the region. A cointegrating relationship between the real effective exchange rate and the ratio of the current account balance of the GDP is tested, based on both linear and nonlinear models. The half-life of current account imbalances is relatively short, implying high capital mobility. Results poin to the existence of a long-run relationship, and in most cases the causality runs from the exchange rate to the current account.
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Bibliographic InfoPaper provided by Asociación Española de Economía y Finanzas Internacionales in its series Working Papers with number 13-08.
Length: 30 pages
Date of creation: Oct 2013
Date of revision:
emerging markets; current account; half-life; East and Southeast Asia;
Other versions of this item:
- Juan Carlos Cuestas & Paulo José Regis, 2013. "On the Relationship Between Exchange Rates and External Imbalances: East and Southeast Asia," Working Papers 2013015, The University of Sheffield, Department of Economics.
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- F15 - International Economics - - Trade - - - Economic Integration
This paper has been announced in the following NEP Reports:
- NEP-ACC-2013-11-16 (Accounting & Auditing)
- NEP-ALL-2013-11-16 (All new papers)
- NEP-CBA-2013-11-16 (Central Banking)
- NEP-OPM-2013-11-16 (Open Economy Macroeconomics)
- NEP-SEA-2013-11-16 (South East Asia)
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