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Book Real Exchange Rates and the Prices of Nontradable Goods

Download or read book Real Exchange Rates and the Prices of Nontradable Goods written by Mr.Gian Milesi-Ferretti and published by International Monetary Fund. This book was released on 1994-02-01 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper attempts to provide a perspective on real exchange rate developments following the inception of the EMS. The focus is on structural determinants of real exchange rates, notably the behavior of tradables and nontradable prices and productivity. It is found that changes in the relative price of tradable goods in terms of nontradables account for a sizable fraction of real exchange rate dynamics during the EMS period. Sectoral productivity growth differential help explain the behavior of the relative price of tradable goods, especially in the long run. There is also some evidence that the EMS has extended on relative price behavior.

Book Real Exchange Rates and the Prices of Nontradable Goods

Download or read book Real Exchange Rates and the Prices of Nontradable Goods written by Stefano Micossi and published by . This book was released on 2006 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper attempts to provide a perspective on real exchange rate developments following the inception of the EMS. The focus is on structural determinants of real exchange rates, notably the behavior of tradables and nontradable prices and productivity. It is found that changes in the relative price of tradable goods in terms of nontradables account for a sizable fraction of real exchange rate dynamics during the EMS period. Sectoral productivity growth differential help explain the behavior of the relative price of tradable goods, especially in the long run. There is also some evidence that the EMS has extended on relative price behavior.

Book The Importance of Nontradable Goods  Prices in Cyclical Real Exchange Rate Fluctuations

Download or read book The Importance of Nontradable Goods Prices in Cyclical Real Exchange Rate Fluctuations written by Ariel T. Burstein and published by . This book was released on 2005 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Changes in the price of nontradable goods relative to tradable goods account for roughly 50 percent of the cyclical movements in real exchange rates"--National Bureau of Economic Research web site

Book Non Tradable Goods and The Real Exchange Rate

Download or read book Non Tradable Goods and The Real Exchange Rate written by and published by "la Caixa". This book was released on with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Book Real Exchange Rates and Fundamentals

Download or read book Real Exchange Rates and Fundamentals written by Luca Antonio Ricci and published by International Monetary Fund. This book was released on 2008 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper employs newly constructed measures for productivity differentials, external imbalances, and commodity terms of trade to estimate a panel cointegrating relationship between real exchange rates and a set of fundamentals for a sample of 48 industrial countries and emerging markets. It finds evidence of a strong positive relation between the CPI-based real exchange rate and commodity terms of trade. The estimated impact of productivity growth differentials between traded and nontraded goods, while statistically significant, is small. Increases in net foreign assets and in government consumption tend to be associated with appreciating real exchange rates.

Book Open Economy Macroeconomics

Download or read book Open Economy Macroeconomics written by Martín Uribe and published by Princeton University Press. This book was released on 2017-04-04 with total page 646 pages. Available in PDF, EPUB and Kindle. Book excerpt: A cutting-edge graduate-level textbook on the macroeconomics of international trade Combining theoretical models and data in ways unimaginable just a few years ago, open economy macroeconomics has experienced enormous growth over the past several decades. This rigorous and self-contained textbook brings graduate students, scholars, and policymakers to the research frontier and provides the tools and context necessary for new research and policy proposals. Martín Uribe and Stephanie Schmitt-Grohé factor in the discipline's latest developments, including major theoretical advances in incorporating financial and nominal frictions into microfounded dynamic models of the open economy, the availability of macro- and microdata for emerging and developed countries, and a revolution in the tools available to simulate and estimate dynamic stochastic models. The authors begin with a canonical general equilibrium model of an open economy and then build levels of complexity through the coverage of important topics such as international business-cycle analysis, financial frictions as drivers and transmitters of business cycles and global crises, sovereign default, pecuniary externalities, involuntary unemployment, optimal macroprudential policy, and the role of nominal rigidities in shaping optimal exchange-rate policy. Based on courses taught at several universities, Open Economy Macroeconomics is an essential resource for students, researchers, and practitioners. Detailed exploration of international business-cycle analysis Coverage of financial frictions as drivers and transmitters of business cycles and global crises Extensive investigation of nominal rigidities and their role in shaping optimal exchange-rate policy Other topics include fixed exchange-rate regimes, involuntary unemployment, optimal macroprudential policy, and sovereign default and debt sustainability Chapters include exercises and replication codes

Book Non Tradable Goods and the Real Exchange Rate

Download or read book Non Tradable Goods and the Real Exchange Rate written by Pau Rabanal and published by . This book was released on 2009 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: How important are nontradable goods and distribution costs to explain real exchange rate dynamics? We answer this question by estimating a general equilibrium model with intermediate and final tradable and nontradable goods. We obtain reasonable estimated parameter values using Bayesian methods, and find that the estimated model can match real exchange rate persistence and, to less extent, volatility. Nontradable sector technology shocks explain about one third of real exchange rate volatility. We present impulse responses to better understand the transmission mechanism of shocks in the open economy. We also show that in order to explain the low correlation between the ratio of relative consumption and the real exchange rates across countries, fiscal policy shocks are necessary in the model, in addition to technology shocks.

Book Estimating the Equilibrium Real Exchange Rate

Download or read book Estimating the Equilibrium Real Exchange Rate written by Mr.Tarhan Feyzioglu and published by International Monetary Fund. This book was released on 1997-09-01 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: An equilibrium exchange rate is here defined as the level that is consistent with simultaneous internal and external balances as specified in Montiel (1996). Exogenous “fundamental” variables determining these balances are identified. Along the lines of Edwards (1994), a reduced form is estimated with the cointegration technique for Finland for the period 1975-95. The estimation produced a reasonable set of equilibrium exchange rates that appreciate with positive shocks to the terms of trade, world real interest rates, and the productivity differential between Finland and its trading partners.

Book Real Exchange Rates  Economic Complexity  and Investment

Download or read book Real Exchange Rates Economic Complexity and Investment written by Steve Brito and published by International Monetary Fund. This book was released on 2018-05-10 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: We show that the response of firm-level investment to real exchange rate movements varies depending on the production structure of the economy. Firms in advanced economies and in emerging Asia increase investment when the domestic currency weakens, in line with the traditional Mundell-Fleming model. However, in other emerging market and developing economies, as well as some advanced economies with a low degree of structural economic complexity, corporate investment increases when the domestic currency strengthens. This result is consistent with Diaz Alejandro (1963)—in economies where capital goods are mostly imported, a stronger real exchange rate reduces investment costs for domestic firms.

Book Real exchange rate and the prices of nontradable goods

Download or read book Real exchange rate and the prices of nontradable goods written by Fondo Monetario Internacional and published by . This book was released on 1994 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Book The Real Exchange Rate and Prices of Traded Goods in OECD Countries

Download or read book The Real Exchange Rate and Prices of Traded Goods in OECD Countries written by Holger Brauer and published by Springer Science & Business Media. This book was released on 2003 with total page 250 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Book The Importance of Nontradable Goods u2019 Prices in Cyclical Real Exchange Rate Fluctuations

Download or read book The Importance of Nontradable Goods u2019 Prices in Cyclical Real Exchange Rate Fluctuations written by Ariel Burstein and published by . This book was released on 2005 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Changes in the price of nontradable goods relative to tradable goods account for roughly 50 percent of the cyclical movements in real exchange rates.

Book Exchange Rate Policy and the Role of Non Traded Goods Prices in Real Exchange Rate Fluctuations

Download or read book Exchange Rate Policy and the Role of Non Traded Goods Prices in Real Exchange Rate Fluctuations written by Nestor Azcona and published by . This book was released on 2017 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses a DSGE model of two small open economies to explain certain features of real exchange rate cyclical fluctuations in countries with fixed and flexible exchange rates, focusing on the role of traded and non-traded goods prices. In particular, the model illustrates why the relative price of nontraded goods and the relative price between domestic and foreign traded goods are more volatile than the real exchange rate under a fixed exchange rate but not under a flexible exchange rate, why deviations from purchasing power parity for traded goods prices can be more volatile under a fixed exchange rate than under a flexible exchange rate, and why there is no correlation between the volatility of the real exchange rate and its variance decomposition.

Book Terms of Trade  Productivity  and the Real Exchange Rate

Download or read book Terms of Trade Productivity and the Real Exchange Rate written by Jose De Gregorio and published by . This book was released on 1994 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper examines the effects of terms of trade movements and productivity differentials across sectors on the behavior of the real exchange rate. We develop a simple model of a small open economy producing exportable and nontradable goods and consuming importable and nontradable goods and present empirical evidence for a sample of fourteen OECD countries. The evidence broadly supports the predictions of the model, namely that faster productivity growth in the tradable relative to the nontradable sector and an improvement in the terms of trade induce a real appreciation.

Book Nontraded Goods Prices and Real Exchange Rate Volatility

Download or read book Nontraded Goods Prices and Real Exchange Rate Volatility written by Marco Aurelio Hernandez Vega and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation provides new empirical evidence on the importance of nontraded goods in real exchange rate volatility as well as two essays that evaluate the performance of a new trade model á la Ghironi and Melitz [2005] in replicating such evidence. Chapter 2 provides new empirical evidence by looking at more highly disaggregated data than used in previous literature on consumer price index components and trade for the US and Mexico for the period 2002 to 2009. The main empirical results from this exercise suggest that the relative price of nontraded to traded goods (RERN) accounts for between 64% and 73% of the real exchange rate volatility which is significantly higher than that found in past studies (around 30%). The correlation between RERN and the real exchange rate is 71%. In contrast with previous literature lower frequency data increases the importance of RERN in the real exchange rate volatility: for quarterly data it is between 68% and 84% and for annual data the importance is between 78% and 88%. These results provide new evidence against the sticky price theory; while they generally support the Balassa-Samuelson theory, facts regarding the correlation of traded and nontraded goods prices point to the need to modify some features of this theory. Chapter 3 evaluates whether a "new trade" model, where entry of heterogeneous firms into international trade is endogenous, can explain the empirical facts documented in chapter 2 better than can a standard Balassa-Samuelson theory, where nontraded goods are exogenously determined. A symmetric two country dynamic stochastic general equilibrium model with heterogeneous firms and entry and exit from domestic and export markets, á la Ghironi and Melitz (2005), performs reasonably well in certain dimensions. Simulations show that the importance of the relative price of nontraded to traded goods (RERN) can explain between 80% and 89% of real exchange rate fluctuations, and can explain a correlation between RERN and the real exchange rate of 97%. The model fails to replicate the empirical evidence that the relative price of nontraded to traded goods is negatively correlated with the relative price of traded goods. Finally, in chapter 4 I calibrate the model to an asymmetric equilibrium where two different economies interact, one large economy representing the US and one small economy representing Mexico. The calibration will involve updating the value of some exogenous variables like the fixed export costs and re-calibrating the shape parameter k from the Pareto distribution. As a result of this new calibration the steady state of the model matches some of the US-Mexico relationships quite well. For example, the steady state of the model implies that home consumption is four times higher than foreign consumption. This value is close to the one reported by Bergin and Glick [2009]. Home real wage is 1.4 times that of foreign country. This value is significantly smaller than the values reported in other studies where wages in the US are up to eight times higher than in Mexico. Nevertheless, it can be considered a good feature of the model that home wages are higher. I conclude that the asymmetric calibration of the Ghironi and Melitz [2005] model improves its performance in replicating the stylized facts reported in chapter two, although, with some caveats regarding the signs and magnitudes of some of the correlations and the fact that moving from monthly to quarterly frequencies does not increases the importance of the relative price of nontraded to traded goods in explaining real exchange rate volatility.