The Swedish Real Exchange Rate under Different Currency Regimes
This paper presents evidence on the behavior of the Swedish real exchange rate relative to Germany under different currency regimes 1973:1-2001:4. The results suggest that the real exchange rate is cointegrated with Swedish and German productivity, which is consistent with Balassa (1964) and Samuelson (1964). In the short run, the regime has mattered for the dynamics of the real exchange rate. Deviations from equilibrium have been adjusted more quickly when the nominal exchange rate has been allowed to float freely, which indicates that it acts as a shock absorber.
|Date of creation:||11 Nov 2002|
|Date of revision:||18 Sep 2003|
|Publication status:||Published in Review of World Economics, 2004, pages 706-727.|
|Note:||This paper is a considerably revised version of my master thesis written at Stockholm University.|
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