IDEAS home Printed from
   My bibliography  Save this paper

Determinants of the structural real exchange rates and economic structures in Argentina, Chile and Mexico


  • VALDIVIA, Fernando Zarzosa


A theoretical model, applied to Argentina, Chile and Mexico, shows how exogenous shocks impact on the structural real exchange rate (SRER, defined by the relative tradable to non-tradable price) and sectoral shares. First, a simulation approach designed to test how rich the theoretical model is in providing predictions: a) captures the behaviour of the Argentinean series quite well but its ability to predict the Chilean and Mexican variables differs between variables and b) shows that the collapse of the Argentinean currency, at the end of 2001, was necessary to correct a 38.9% SRER misalignment. In addition, a cointegration approach shows that: a) productivity improvements in the Mexican manufacturing sector reduce its share to GDP, b) labour endowments influence positively the Chilean SRER and both tradable sectors in Argentina and Mexico, while they reduce the Chilean primary sector, c) terms of trade improvements depreciate the SRER of all countries but reduce the size of the primary sector in Chile and Mexico, d) government spending reduces the Mexican SRER and the primary and manufacturing shares in Argentina while it increases the Mexican SRER and manufacturing shares, e) additional external debt reduces the Argentinean SRER and reduces (increases) the Argentinean and Mexican primary (manufacturing) shares and f) the collapse of the Argentinean currency depreciated its SRER by about 31.1% with an 18% overshooting. The benchmarking of the simulated and cointegrated results for Argentina reveals that the cumulated Argentinean SRER misalignment before the collapse of its currency was due to fundamental factors.

Suggested Citation

  • VALDIVIA, Fernando Zarzosa, 2010. "Determinants of the structural real exchange rates and economic structures in Argentina, Chile and Mexico," Working Papers 2010025, University of Antwerp, Faculty of Applied Economics.
  • Handle: RePEc:ant:wpaper:2010025

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Balvers, Ronald J. & Bergstrand, Jeffrey H., 2002. "Government expenditure and equilibrium real exchange rates," Journal of International Money and Finance, Elsevier, vol. 21(5), pages 667-692, October.
    2. Rebecca L Driver & Peter F Westaway, 2005. "Concepts of equilibrium exchange rates," Bank of England working papers 248, Bank of England.
    3. Anne-Laure Baldi & Nanno Mulder, 2004. "The Impact of Exchange Rate Regimes on Real Exchange Rates in South America, 1990-2002," OECD Economics Department Working Papers 396, OECD Publishing.
    4. Enrique Alberola, 2003. "Misalignment, liabilities dollarization and exchange rate adjustment in Latin America," Working Papers 0309, Banco de EspaƱa;Working Papers Homepage.
    5. Huisman, K.J.M. & Kort, P.M. & Plasmans, J.E.J., 2007. "Investment in High-Tech Industries : An Example from the LCD Industry," Discussion Paper 2007-85, Tilburg University, Center for Economic Research.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Structural real exchange rate; Factor productivity; Endowments; Sectoral income distribution; Dutch disease; Cointegration;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ant:wpaper:2010025. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joeri Nys). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.