Economics Liberalization and the Equilibrium Real Exchange Rate in Developing Countries
AbstractThis paper deals with the relation between commercial policy and "the" equilibrium real exchange rate. The paper clarifies the meaning of real exchange rate by comparing five different definitions that are currently found in the literature, The analysis focuses on the effects of an economic liberalization program that reduces import tariffs on the equilibrium real exchange rate under a number of alternative assumptions regarding capital mobility. From a policy perspective this is an important issue, since countries that embark on liberalization are usually concerned with avoiding real exchange rate misalignment and overvaluation. The effects of terms of trade shocks on the equilibrium real exchange rate are also investigated.
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Bibliographic InfoPaper provided by UCLA Department of Economics in its series UCLA Economics Working Papers with number 433.
Date of creation: 01 Feb 1987
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Web page: http://www.econ.ucla.edu/
Other versions of this item:
- Sebastian Edwards, 1991. "Economic Liberalization and the Equilibrium Real Exchange rate in Developing Countries," NBER Working Papers 2179, National Bureau of Economic Research, Inc.
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