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Single-equation estimation of the equilibrium real exchange rate Author info | Abstract | Publisher info | Download info | Related research | Statistics Baffes, John
Elbadawi, Ibrahim A.
O'Connell, Stephen A.
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registered author(s):
Estimating the degree of exchange-rate misalignment remains one of the most challenging empirical problems in an open economy. The basic problem is that the value of the real exchange rate is not observable. Standard theory tells us, however, that the equilibrium real exchange rate is a function of observable macroeconomic variables and that the actual real exchange rate approaches the equilibrium rate over time. A recent strand of the empirical literature exploits these observations to develop a single-equation approach to estimating the equilibrium real exchange rate. Drawing on that earlier work, the authors outline an econometric methodology for estimating both the equilibrium real exchange rate and the degree of exchange-rate misalignment. They illustrate the methodology using annual data from Cote d'Ivoire and Burkina Faso.
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Paper provided by The World Bank in its series Policy Research Working Paper Series with number
1800.
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Date of creation: 31 Aug 1997Date of revision:
Handle: RePEc:wbk:wbrwps:1800Contact details of provider: Postal: 1818 H Street, N.W., Washington, DC 20433 Email: Web page: http://www.worldbank.org/ More information through EDIRC
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Keywords: Fiscal&Monetary Policy Economic Theory&Research Environmental Economics&Policies ICT Policy and Strategies Scientific Research&Science Parks Economic Stabilization Macroeconomic Management Economic Theory&Research Environmental Economics&Policies Pro-Poor Growth and Inequality Other versions of this item:
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