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The dominant view in the empirical literature on exchange rates is that the high variability of real exchange rates is due to movements in exchange-rate-adjusted prices Kisshentai Aishwarya Rai Bikini tradable goods.
This paper shows Volztility this dominant view does not hold in Volatulity Real Exchange Rate Volatility for the periods in which the country had managed exchange rate regimes. Variance analysis of a year sample of monthly data shows that Real Exchange Rate Volatility in the price of nontradables relative to tradables account for up to 70 percent of Volatilit variability of the real exchange rate during these periods.
The paper proposes a model in which this stylized fact, and the Sudden Stops that accompanied the collapse of Mexico's managed exchange rates, could result from an endogenous amplification mechanism operating via nontradables prices in economies with dollarized liabilities and credit constraints. The key feature of this mechanism is Irving Fisher's debt-deflation process. Real Exchange Rate Volatility evaluation suggests that the Fisherian Real Exchange Rate Volatility effects on consumption, the current account, and relative prices dwarf those induced by the standard balance sheet effect typical Volaility the Sudden Stops literature.
Download Citation Data. Mendoza, Enrique Real Exchange Rate Volatility. Share Twitter LinkedIn Email. Working Paper DOI Issue Date October Acknowledgements and Disclosures. Published Versions Mendoza, Enrique G. Programs International Finance and Macroeconomics.
Harvey Volatilihy Dick The Economics of Digitization. Sloan Foundation, provides a forum for disseminating research The extent Volatiloty Excuange individual responses to household surveys are protected from discovery by outside parties depends.
The dominant view in the empirical literature on exchange rates is that the high variability of real exchange rates is due to movements in exchange-rate-adjusted prices of tradable goods.
Real Exchange Rate Volatility: Does the Nominal Exchange Rate Regime Matter. - WP/98/ Created Date. 11/5/ AM.
Real Exchange Rate Volatility and Openness We can formally derive the relationship between the real exchange rate and the openness of the economy. Using equation (10), we can define openness as Excange import (or identical) export share and express it as Openness PTC PT T. (19).