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

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  • Andrea Saayman

Abstract

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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  • Andrea Saayman, 2007. "The Real Equilibrium South African Rand/US Dollar Exchange Rate: A Comparison of Alternative Measures," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 13(2), pages 183-199, May.
    • Handle: RePEc:kap:iaecre:v:13:y:2007:i:2:p:183-199:10.1007/s11294-006-9075-6
    DOI: 10.1007/s11294-006-9075-6
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    Cited by:

    1. Stewart Ngandu, 2008. "Exchange Rates And Employment," South African Journal of Economics, Economic Society of South Africa, vol. 76(s2), pages 205-221, August.
    2. Trust R. Mpofu, 2021. "The determinants of real exchange rate volatility in South Africa," The World Economy, Wiley Blackwell, vol. 44(5), pages 1380-1401, May.

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    Keywords

    equilibrium exchange rate; South Africa;

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