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How misaligned is the Australian real exchange rate?

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Author Info
Satish Chand

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Abstract

This paper uses quarterly data from September 1981 to December 2000 to quantify the extent to which the Australian real exchange rate is misaligned relative to its long-run equilibrium value. Our modelling suggest, that as of December 2000, the real exchange rate was seven percent below its equilibrium value; this figure is modest in comparison to purchasing power parity indicators that suggest considerably greater misalignment. Furthermore, once short-run dynamics are accounted for, even this anomaly disappears.

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File URL: http://www.crawford.anu.edu.au/degrees/idec/working_papers/IDEC01-2.pdf
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Paper provided by International and Development Economics in its series International and Development Economics Working Papers with number idec01-2.

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Length: 30 pages
Date of creation: 2001
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Handle: RePEc:idc:wpaper:idec01-2

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Find related papers by JEL classification:
E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
Z00 - Other Special Topics - - General - - - General

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Rodriguez, Carlos Alfredo, 1989. "The external effects of public sector deficits," Policy Research Working Paper Series 299, The World Bank. [Downloadable!]
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  2. Michael Bruno & Jeffrey Sachs, 1982. "Energy and Resource Allocation: A Dynamic Model of the "Dutch Disease"," NBER Working Papers 0852, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Shakila Aruman & Mardi Dungey, 2003. "A Perspective on Modelling the Australian Real Trade Weighted Index since the Float," Australian Economic Papers, Blackwell Publishing, vol. 42(1), pages 56-76, 03. [Downloadable!] (restricted)
  4. McKibbin, Warwick J & Vines, David, 2000. "Modelling Reality: The Need for Both Inter-temporal Optimization and Stickiness in Models for Policy-Making," Oxford Review of Economic Policy, Oxford University Press, vol. 16(4), pages 106-37, Winter.
  5. Wells, Graeme & Evans, Lewis, 1985. "The Impact of Traded Goods Prices on the New Zealand Economy," The Economic Record, The Economic Society of Australia, vol. 61(172), pages 421-35, March.
  6. Baffes, John & Elbadawi, Ibrahim A. & O'Connell, Stephen A., 1997. "Single-equation estimation of the equilibrium real exchange rate," Policy Research Working Paper Series 1800, The World Bank. [Downloadable!]
  7. Adrian Blundell-Wignall & Robert G. Gregory, 1990. "Exchange Rate Policy in Advanced Commodity-Exporting Countries: The Case of Australia and New Zealand," OECD Economics Department Working Papers 83, OECD Economics Department. [Downloadable!]
  8. Khan, Mohsin S & Lizondo, J Saul, 1987. "Devaluation, Fiscal Deficits, and the Real Exchange Rate," World Bank Economic Review, Oxford University Press, vol. 1(2), pages 357-74, January.
  9. Dornbusch, Rudiger, 1974. "Tariffs and nontraded goods," Journal of International Economics, Elsevier, vol. 4(2), pages 177-185, May. [Downloadable!] (restricted)
  10. Bruno, Michael & Sachs, Jeffrey, 1982. "Energy and Resource Allocation: A Dynamic Model of the "Dutch Disease"," Review of Economic Studies, Blackwell Publishing, vol. 49(5), pages 845-59, Special I. [Downloadable!] (restricted)
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