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The Impact of Exchange Rate Regimes on Real Exchange Rates in South America, 1990-2002

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  • Anne-Laure Baldi
  • Nanno Mulder

Abstract

This paper analyses the impact of exchange rate regimes on real exchange rates, as defined by the relative price of nontradables to tradables in Argentina, Brazil, Chile (ABC) and Mexico from 1990 to 2002. The real exchange rate is determined in the long-run by the Balassa-Samuelson effect, but in the medium run also by government expenditure and terms of trade. Another determinant is fixed exchange rate regimes, which force exporters to adjust their local price of tradables. Moreover, fixed regimes attract portfolio inflows that increase demand and prices for nontradables. The econometric results of the paper confirm the impact of exchange rate regimes on relative prices in all countries except Chile, which maintained exchange rate flexibly and adopted capital controls ... L'impact des régimes de change sur le taux de change réel en Amérique latine, 1990-2002 Cet article analyse l'impact des régimes de change sur le taux de change réel- défini comme le prix relatif des biens du secteur abrité et des biens du secteur exposé- en Argentine, Brésil, Chili (ABC) et au Mexique de 1990 à 2002. Le taux de change réel est déterminé dans le long terme par l'effet Balassa- Samuelson et à moyen terme par les dépenses du gouvernement et les termes de l'échange. Les régimes de change fixes peuvent constituer un nouveau déterminant car ils forcent les exportateurs à geler le prix local des biens échangeables. Simultanément ils attirent des flux de portefeuille qui exercent une pression à la hausse sur la demande et donc les prix des biens abrités. Les résultats économétriques de l'article confirment l'impact des régimes de change sur les prix relatifs de tous les pays sauf le Chili qui a aintenu une flexibilité de change et imposé des contrôles de capitaux ...

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File URL: http://dx.doi.org/10.1787/256327408747
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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 396.

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Date of creation: 30 Jun 2004
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Handle: RePEc:oec:ecoaaa:396-en

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Keywords: exchange rate policy; Latin America; real exchange rates; politique de change; Amérique latine; taux de change réel;

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Cited by:
  1. Wiebelt, Manfred & Pauw, Karl & Matovu, John Mary & Twimukye, Evarist & Benson, Todd, 2011. "Managing future oil revenue in Uganda for agricultural development and poverty reduction: A CGE analysis of challenges and options," IFPRI discussion papers, International Food Policy Research Institute (IFPRI) 1122, International Food Policy Research Institute (IFPRI).
  2. VALDIVIA, Fernando Zarzosa, 2010. "Determinants of the structural real exchange rates and economic structures in Argentina, Chile and Mexico," Working Papers 2010025, University of Antwerp, Faculty of Applied Economics.

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