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The Real Equilibrium South African Rand/US Dollar Exchange Rate: A Comparison of Alternative Measures

  • Andrea Saayman


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    This article indicates how different measures of the real exchange rate, i.e., the exchange rate adapted for cost inflation, price inflation and labour costs, influence the equilibrium view and misalignment of the South African rand/US dollar exchange rate. The approach followed is based on the behavioural equilibrium exchange rate approach by Clark and MacDonald ( 1998 ), where the exchange rate is influenced by a number of fundamental and transitory factors. The real equilibrium exchange is estimated by using a single equation regression and a number of key explanatory variables. To determine the long-run relationship a Vector Error Correction Mechanism is used. Copyright International Atlantic Economic Society 2007

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    Article provided by International Atlantic Economic Society in its journal International Advances in Economic Research.

    Volume (Year): 13 (2007)
    Issue (Month): 2 (May)
    Pages: 183-199

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    Handle: RePEc:kap:iaecre:v:13:y:2007:i:2:p:183-199
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