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The Role Of Commodity Terms Of Trade In Determining The Real Exchange Rates Of Mediterranean Countries

  • Juan Carlos Cuestas

    ()

    (Universidad de Alicante)

  • Javier Ordoñez

    (Universitat Jaume I)

  • Mariam Camarero

    (Universitat Jaume I)

The aim of this paper is to investigate whether there exists a long run relationship between the real exchange rate and the commodity terms of trade in the so-called ¿Mediterranean¿ or MENA countries. These economies are good candidates for this type of formulation, as they can be considered commodity exporting countries. Using cointegration techniques, we find long run relationships linking the real exchange rate and a commodity-based measure of the terms of trade. Thus, commodity terms of trade are a potential explanation for the apparent non-stationarity of MENA countries real exchange rate previously found in the empirical literature.

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Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2007-15.

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Length: 23 pages
Date of creation: Jul 2007
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2007-15
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