What Do We Really Know About Real Exchange Rates?
AbstractThis paper seeks to provide a comprehensive overview of the recent literature on the economics of real exchange rates. In particular, the paper attempts to provide answers to the following questions: to what extent are real exchange rates mean reverting and how may the degree of observed mean reversion be explained?; do real exchange rates have a business cycle component and, in particular, are they related to real interest differentials?; how important are real, relative to nominal shocks, in driving real exchange rates?; is the systematic component of the real exchange rate related to factors such as productivity, net foreign asset accumulation, national savings imbalances and terms of trade effects?
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Bibliographic InfoPaper provided by Oesterreichische Nationalbank (Austrian Central Bank) in its series Working Papers with number 28.
Date of creation: 20 Jun 1998
Date of revision:
Postal: Oesterreichische Nationalbank, Economic Studies Division, c/o Beate Hofbauer-Berlakovich, POB 61, A-1011 Vienna, Austria
Find related papers by JEL classification:
- F31 - International Economics - - International Finance - - - Foreign Exchange
- E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
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- Cochrane, John H, 1988. "How Big Is the Random Walk in GNP?," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 893-920, October.
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