Real variables and the real exchange rate: The importance of traded goods in the transmission mechanism
I find that real variables affect the real exchange rate almost entirely through the relative price of traded goods. This finding casts doubt on the theoretical literature that postulates that real shocks propagate only through the relative price of nontraded goods.
Volume (Year): 6 (2006)
Issue (Month): 1 ()
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References listed on IDEAS
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- Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72, pages 584.
- Engel, C., 1996.
"Accounting for U.S. Real Exchange Rate Changes,"
96-02, University of Washington, Department of Economics.
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- Charles Engel, 1995. "Accounting for U.S. Real Exchange Rate Changes," NBER Working Papers 5394, National Bureau of Economic Research, Inc.
- Neary, J Peter, 1987.
"Determinants of the Equilibrium Real Exchange Rate,"
CEPR Discussion Papers
209, C.E.P.R. Discussion Papers.
- Neary, Peter, 1988. "Determinants of the Equilibrium Real Exchange Rate," American Economic Review, American Economic Association, vol. 78(1), pages 210-15, March.
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