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Exchange Rate Assessments

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Author Info

  • Irineu E. Carvalho Filho
  • Rudolfs Bems

Abstract

Are the current account fluctuations in oil-exporting countries "excessive"? How should their real exchange rate respond to the evolution of external (and domestic) fundamentals? This paper proposes methodologies tailored to the specific features of oil-exporting countries that help address these questions. Price-based methodologies (based on the time series of real effective exchange rates) identify a strong link between the real exchange rate and the terms of trade, but have relatively limited explanatory power. On the other hand, an empirical model of the current account, which fits oil exporting countries'' data well, and an intertemporal model that takes into account the stock of oil reserves provide useful benchmarks for oil exporters'' external balances.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 09/281.

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Length: 35
Date of creation: 01 Dec 2009
Date of revision:
Handle: RePEc:imf:imfwpa:09/281

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Keywords: Oil exporting countries; Commodity price fluctuations; Economic models; Exchange rates; Oil prices; Oil revenues; Real effective exchange rates; exporting countries; oil exporters; oil-exporting countries; exporters; oil countries; oil exports; oil exporting; terms of trade; current account balance; reer; output growth; oil importers; importing countries; oil-importing countries; trading partners; tradable goods; export taxes; exporting country; export supply; trade restrictions; domestic prices; trade liberalization; price fluctuations; current account surplus; gas exports; trading partner; trade shocks; gas exporting country; measure of trade; balance trade; elasticity of exports; exchange rate movements; commodity prices; current account deficit; oil-producing countries; domestic consumption; oil-exporting country; terms of trade shocks; oil export; restriction index; trade restriction; real effective exchange rate; exports of oil; domestic demand; transition economies;

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References

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Citations

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Cited by:
  1. Juliana Dutra Araujo & Grace Bin Li & Marcos Poplawski-Ribeiro & Luis-Felipe Zanna, 2013. "Current Account Norms in Natural Resource Rich and Capital Scarce Economies," IMF Working Papers 13/80, International Monetary Fund.
  2. Jordi Prat & Leandro Medina & Alun H. Thomas, 2010. "Current Account Balance Estimates for Emerging Market Economies," IMF Working Papers 10/43, International Monetary Fund.
  3. Paul Cashin & Samya Beidas-Strom, 2011. "Are Middle Eastern Current Account Imbalances Excessive?," IMF Working Papers 11/195, International Monetary Fund.
  4. Robert C. York & Misa Takebe, 2011. "External Sustainability of Oil-Producing Sub-Saharan African Countries," IMF Working Papers 11/207, International Monetary Fund.

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