What Explains Real and Nominal Exchange Rate Fluctuations? Evidence from SVAR Analysis for India
This study empirically analyzes the sources of the exchange rate fluctuations in Indiaby employing the structural VAR model. The VAR system consists of three variables,i.e., the nominal exchange rate, the real exchange rate, and the relative output ofIndia and a foreign country. Consistent with most previous studies, the empiricalevidence demonstrates that real shocks are the main drives of the fluctuations in realand nominal exchange rates, indicating that the central bank cannot maintain the realexchange rate at its desired level over time.
|Date of creation:||01 Oct 2009|
|Publication status:||Published in IDE Discussion Paper = IDE Discussion Paper, No. 216. 2009-10-01|
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