equilibrium real exchange rate in a commodity exporting country

the case of Russia by Nikola Spatafora

Publisher: International Monetary Fund, Europeam II Department in [Washington, D.C.]

Written in English
Published: Pages: 21 Downloads: 93
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Subjects:

  • Foreign exchange rates -- Russia (Federation),
  • Primary commodities -- Russia (Federation),
  • Commercial products -- Russia (Federation),
  • Exports -- Russia (Federation)

Edition Notes

StatementNikola Spatafora and Emil Stavrev.
SeriesIMF working paper -- WP/03/93
ContributionsStavrev, Emil., International Monetary Fund. European II Dept.
The Physical Object
Pagination21 p. :
Number of Pages21
ID Numbers
Open LibraryOL21475306M

Shehu Usman Rano, Aliyu, “ Real exchange rate misalignment: an application of behavioral equilibrium exchange rate to Nigeria”, (), Munich Personal RePEc archive, pp. [40] Taline Koranchelian, “The equilibrium real exchange rate in commodity exporting country: Algeria’s Experince”, (), IMF working paper, pp. actual real exchange analysis appreciation assumptions balance of payments cbss cbst cent below trend Chart competitiveness elasticities country food prices CPlD deficit derived developed country food deviations differ from trend direct investment econometric Equilibrium Exchange Rates European Monetary System exchange rate path FEER represents. Machine-readable bibliographic record - MARC, RIS, BibTeX Document Object Identifier (DOI): /w Published: Edwards, Sebastian. "Commodity Export Boom and the Real Exchange Rate: The Money-Inflation Link," Natural Resources and the Macroeconomy, eds. J. Peter Neeny and Sweder van Wijnbergen, Cambridge, MA: MIT Press, The state of the countries' balance of payments, as follows from the above, is largely determined by the volume of their net exports (XN), which in turn depends not only on the nominal exchange rates of the respective currencies, but also on the correlation of price levels in different countries, t.e. from real exchange rates (Chapter 3 of.

Substituting in the numbers from above gives real exchange rate = ( X $6) / lira = bottles of Italian wine per bottle of American wine. By using both the nominal exchange rate and the real exchange rate, we can deduce important information about the relative cost of living in two countries. Tangent pp at point Q to its production possibility curve EF and the community indifference curve II shows the domestic rate of exchange of two commodities before foreign trade. It will be seen from Figures and that the price ratio (rate of exchange) of the two commodities in the two countries differs (slopes of tangents pp in them vary). The exchange rate plays an important role in a country’s trade performance. Whether determined by exogenous shocks or by policy, the relative valuations of currencies and theirFile Size: KB. strength of the commodity price-real exchange rate dependence. Keywords: Real exchange rates * commodity prices * exchange rate regime * - nancial openness * panel analysis. JEL Classi cation: C32, C33, E31, F32, 1The authors thank the participants of the fth annual Method in International Finance Network (MIFN) workshop at Size: KB.

Fixed exchange rate systems include commodity-based systems and fixed rates that are maintained through intervention. Suppose the market for a country’s currency is in equilibrium and that its exports equal $ billion, its purchases of rest-of-world assets equal $1, billion, and foreign purchases of its assets equal $1, billion.   Fixed exchange rate systems include commodity-based systems and fixed rates that are maintained through intervention. Suppose the market for a country’s currency is in equilibrium and that its exports equal $ billion, its purchases of rest-of-world assets equal $1, billion, and foreign purchases of its assets equal $1, billion. The aim of this paper is to estimate the long-run Equilibrium Real Exchange Rate (ERER) path using VECM approach, and assesses the degree of misalignment in Algeria. Based on annual data from to , our results show that the macroeconomic variables such as terms of trade, trade openness, differential productivity with trading partners (Balassa-Samuelson effect), real Author: Samir Ait Yahia, Tarek Djeddi, Tayeb Louafi. the real exchange rate and commodity export prices depends on the nation’s export market structure, monetary policy choices and degree of trade and financial openness. We also show that the commodity price-exchange rate connection is much weaker in the short-run and for a group of oil-exporting Size: KB.

equilibrium real exchange rate in a commodity exporting country by Nikola Spatafora Download PDF EPUB FB2

The Equilibrium Real Exchange Rate in a Commodity Exporting Country: Algeria's Experience Prepared by Taline Koranchelian1 Authorized for distribution by Erik De Vrijer July Abstract This Working Paper should not be reported as representing the views of the IMF.

The half-life of the deviation of the real exchange rate from the estimated equilibrium level is about nine months, similar to that in other commodity-exporting countries. The general conclusions are that: (i) there is a time-varying long-run equilibrium exchange rate in Algeria as in other commodity-exporting countries.

Spatafora, Nikola and Stavrev, Emil, The Equilibrium Real Exchange Rate in a Commodity Exporting Country: The Case of Russia (May ). IMF Working Paper, Vol., Cited by: The Equilibrium Real Exchange Rate in a Commodity Exporting Country: Algeria's Experience. The Equilibrium Real Exchange Rate in a Commodity Exporting Country; Algeria’s Experience.

Taline Koranchelian. No 05/, IMF Working Papers from International Monetary Fund Abstract: Drawing on the existing literature, I estimate a long-run equilibrium real exchange rate path for Algeria.

I find that the Balassa-Samuelson effect together with real oil Cited by: The general conclusions are that: (i) there is a time-varying long-run equilibrium exchange rate in Algeria as in other commodity-exporting countries; and (ii) the real effective exchange rate of the Algerian dinar at end was broadly in line with this equilibrium.

Koranchelian, T, The Equilibrium Real Exchange Rate in a Commodity Exporting Country: Algeria’s Experience, IMF Working Paper, 05/, Washington, USA,has been cited by the following article. The Equilibrium Real Exchange Rate in a Commodity Exporting Country: The Case of Russia.

Electronic Access: Free Full Text. Disclaimer: This Working Paper should not be reported as representing the views of the views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy.

Downloadable. Questions about external competitiveness, exchange rate misalignment, and the appropriate exchange rate policy feature prominently in the Russian policy debate. This paper furthers the debate by estimating empirically Russia's equilibrium real exchange rate (ERER)-that is, the rate consistent with the long-run economic fundamentals-and sheds light on the extent to which exchange.

The general conclusions are that: (i) there is a time-varying long-run equilibrium exchange rate in Algeria as in other commodity-exporting countries; and (ii) the real effective exchange rate of the Algerian dinar at end was broadly in line with this ge rates;exchange rate, real exchange rate, real effective exchange Author: Taline Koranchelian.

For commodity currencies, the average half-life of adjustment of the real exchange rate to its equilibrium with real commodity prices is about 10 months, which is much shorter-lived than Rogoff's () consensus estimate of the half-life of real exchange rate deviations from purchasing power parity of between 3 and 5 by: The equilibrium real exchange rate in a commodity exporting country: the case of Russia.

The Equilibrium Real Exchange Rate in a Commodity Exporting Country: The Case of Russia Article (PDF Available) June with 69 Reads How we measure 'reads'. That is, the equilibrium real exchange rate is determined by the terms of trade, given the elasticities of demand and supply for importables and exportables and the share of nontraded goods in the economy.

7 If the terms of trade strengthen, the equilibrium value of the real exchange rate must appreciate (competitiveness s = e − p n falls. This paper investigates the relationship between energy prices and the real effective exchange rate of commodity-exporting countries.

We consider two sets of countries: 10 energy-exporting and 23 commodity-exporting countries over the period –Cited by: CEPII Working Paper Energy prices and the real exchange rate of commodity-exporting countries Regarding the link between energy prices and real exchange rates, research has essentially been focusing on two topics: the impact of oil.

an appreciation of the real exchange rate. Empirically, the relationship between the terms of trade and the real exchange rate has been tested and proven in a number of non-energy commodity exporters. Amano and van Norden () find that – as expected - the non-energy ECB Working Paper Series No December   We assess the determinants of equilibrium real exchange rates in a sample of oil-dependent countries.

Our data cover OPEC countries from to Utilising pooled mean group and mean group estimators, we find that the price of oil has a clear, statistically significant effect on real exchange rates in our group of oil-producing by: The general conclusions are that: (i) there is a time-varying long-run equilibrium exchange rate in Algeria as in other commodity-exporting countries; and (ii) the real effective exchange rate.

prices and the real e ective exchange rate of 58 commodity-exporting countries and found evidence of such a relationship for about one-third of their sample of countries. Coudert et al. () report similar evidence for a large group of commodity exporting countries, including oil File Size: KB.

Get this from a library. The equilibrium real exchange rate in a commodity exporting country: Algeria's experience. [Taline Koranchelian] -- Drawing on the existing literature, I estimate a long-run equilibrium real exchange rate path for Algeria.

I find that the Balassa-Samuelson effect together with real oil prices explain the long-run. Sources of Shifts in the Equilibrium Real Exchange Rate There is universal agreement on the principle that real events can change equilibrium real exchange rates, which are after all relative prices like any others.

The sources of dispute Cited by: Get this from a library. The equilibrium real exchange rate in a commodity exporting country: the case of Russia. [Nikola Spatafora; Emil Stavrev; International Monetary Fund. European II Department.] -- Questions about external competitiveness, exchange rate misalignment, and the appropriate exchange rate policy feature prominently in the Russian policy debate.

fluctuations. Indeed, commodity prices are generally found to drive real exchange rate fluctuations in commodity-exporting countries (Chen and Rogoff, ; Cashin et al., ) and econometric models of real equilibrium exchange rates often include this series among their explanatory variables (Isard, ; Ricci et al., ).

Oil prices are also. Topic 1: Commodity Market Equilibrium. The domestic private and government sectors also import goods and services for consumption and investment and re-export. Denoting foreign variables by placing a ˆ on top of them, total imports can be expressed as A fall in the real exchange rate.

Real exchange rates and primary commodity prices. Joao Ayres (), Constantino Hevia and Juan Pablo Nicolini. Journal of International Economics,vol.issue C. Abstract: In this paper, we show that there is substantial comovement between prices of primary commodities such as oil, aluminum, maize, or copper and real exchange rates between developed.

Koranchelian, T, The Equilibrium Real Exchange Rate in a Commodity Exporting Country: Algeria’s Experience, IMF Working Paper, 05/, Washington, USA,In article View Article [15] Madouni, M.

“Real Exchange Rate Misalignment in Algeria”, International Journal of Arts and Commerce, 3(5),Author: Samir Ait Yahia, Tarek Djeddi, Tayeb Louafi. In particular, countries with “Commodity Currencies” have been given more attentions, and evidences have been found that there exists a long-run relationship between the real exchange rate and the real commodity price for commodity-exporting countries 1 [7], including Australia, Canada, Chile, New Zealand 2, and South Africa.

Similar Cited by: 2. Suppose N countries, j=1,N potentially trade the commodity. Each country’s real net demand, written Qj, is the difference between consumption and production. Thus, Qj >0 if j is a net demander/importer and Qj country j’s exchange rate in LCU/$ beE j and its domestic price level in LCU be P j.

Then. This paper tests the hypothesis of 'commodity currency' on the nuevo sol and, more generally, identifies the drivers of Peru's equilibrium real exchange rate using a cointegration analysis.

The results show that export commodity prices do not have a statistically significant impact on Peru's real effective exchange rate, suggesting that the. A $ increase in government purchases will have exactly the same effect on equilibrium real GDP as a $ decrease in autonomous net taxes regardless of the value of the MPC.

An exchange rate is the price of one commodity (e.g., corn) measured in terms of another commodity (e.g., wheat). A country should export only those goods for.Exchange rate overshooting occurs because exchange rates tend to be more flexible than other prices; exchange rates often fluctuates more in the short run than in the long run so as to compensate for other prices that are slower to adjust to their long-run equilibrium levels.The theory.

The Balassa–Samuelson effect depends on inter-country differences in the relative productivity of the tradable and non-tradable sectors. The empirical “Penn Effect” By the law of one price, entirely tradable goods cannot vary greatly in price by location (because buyers can source from the lowest cost location).

However most services must be delivered locally (e.g.