On the long-run determinants of real exchange rates for developing countries : Evidence from Africa, Latin America and Asia
AbstractThe main goal of this paper is to tackle the empirical issues of the real exchange rate litterature by applying recently developed panel cointegration techniques to a structural long-run real exchange rate equation. We consider here a sample of 45 developing countries, divided into three groups according to geographical criteria: Africa, Latin America and Asia. Our investigations confirm that having a reference to assess the degree of distortion of real exchange rate is not as simple as it can be thought with the PPP concept. The real exchange rate is e?ectively at the centre of an economic spiral and its value depends on the economic specificities of each country. In other words, we don’t have a fixed and general norm but, for each economy, the real exchange rate trajectory depends on its development level, on the way economic policy is conducted, and on its position on the international market.
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Bibliographic InfoPaper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 2003-571.
Length: 31 pages
Date of creation: 08 May 2003
Date of revision:
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Real exchange rate; Developing country;
Other versions of this item:
- Christophe Rault & Imed Drine, 2004. "On the long-run determinants of real exchange rates for developing countries : Evidence from Africa, Latin America and Asia," Econometric Society 2004 Far Eastern Meetings, Econometric Society 403, Econometric Society.
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- F0 - International Economics - - General
- F31 - International Economics - - International Finance - - - Foreign Exchange
- C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
This paper has been announced in the following NEP Reports:
- NEP-AFR-2004-06-07 (Africa)
- NEP-ALL-2004-06-07 (All new papers)
- NEP-DEV-2003-11-23 (Development)
- NEP-FIN-2003-11-23 (Finance)
- NEP-IFN-2004-06-07 (International Finance)
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