Determinants of Venezuela"s equilibrium real exchange rate

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International Monetary Fund, Western Hemisphere Dept. , [Washington, D.C.]
Foreign exchange rates -- Venezuela -- Econometric mo
Statementprepared by Juan Zalduendo.
SeriesIMF working paper -- WP/06/74
ContributionsInternational Monetary Fund. Western Hemisphere Dept.
The Physical Object
Pagination17 p. :
ID Numbers
Open LibraryOL20689929M

Several findings are worth noting. First, oil prices have indeed played a significant role in determining a time-varying equilibrium real exchange rate path.

Description Determinants of Venezuela"s equilibrium real exchange rate PDF

Second, oil prices are not the only important determinant of the real effective exchange rate: declining productivity is also a key factor. Third, appreciation pressures are rising.

Determinants of Venezuela’s Equilibrium Real Exchange Rate For Venezuela’s REER, three factors are likely to be important: oil prices; productivity; and macro-policies. • Oil prices (and other commodity prices) are a primary source of fluctuation in the equilibrium real exchange rate.5 Higher oil prices lead to higher wages in the oil.

First, oil prices have indeed played a significant role in determining a time-varying equilibrium real exchange rate path. Second, oil prices are not the only important determinant of the real effective exchange rate: declining productivity is also a key factor.

Third, appreciation pressures are by: Downloadable. The Venezuelan Bolivar is pegged to the U.S. dollar and supported by foreign exchange restrictions.

Details Determinants of Venezuela"s equilibrium real exchange rate PDF

To assess the appropriateness of the peg during the current period of high oil export earnings and the likely consequences of a liberalization, this paper attempts to disentangle the effects of oil prices from other factors underlying the equilibrium real exchange rate, and.

Determinants of Venezuela’s Equilibrium Real Exchange Rate. Juan Zalduendo. No /, IMF Working Papers from International Monetary Fund. Abstract: The Venezuelan Bolivar is pegged to the U.S. dollar and supported by foreign exchange restrictions. To assess the appropriateness of the peg during the current period of high oil export earnings and the likely consequences of a liberalization, Cited by: 6.

In his work on the determinants of Venezuela's equilibrium real exchange rate, Zalduendo () examined whether the continued use of exchange rate peg was justified, especially during a period of.

Abstract. The Venezuelan Bolivar is pegged to the U.S. dollar Determinants of Venezuelas equilibrium real exchange rate book supported by foreign exchange restrictions.

To assess the appropriateness of the peg during the current period Determinants of Venezuelas equilibrium real exchange rate book high oil export earnings and the likely consequences of a liberalization, this paper attempts to disentangle the effects of oil prices from other factors underlying the equilibrium real exchange rate, and examines.

Estimating the equilibrium real exchange rate in Venezuela Hilde Bjørnland University of Oslo Abstract To determine whether the real exchange rate is misaligned with respect to its long−run equilibrium is an important issue for policy makers.

This paper clarifies and calculates the. equilibrium real exchange rate, whereas both real and nominal factors influence the actual real exchange rate in the short run. The model assumes a small, open economy, which produces and consumes two goods - tradables and nontradables.

Importables and exportables are aggregated into one tradable category. relationship and yields a nominal equilibrium exchange rate that is consistent with current price levels and interest rates. The idea underlying this approach is that while PPP may explain long-run movements in real exchange rates, the real exchange rate may be away from equilibrium as a result of non-zero interest rate differentials.

equilibrium real exchange rate. Therefore, an accurate analysis of the equilibrium exchange rate, and consequent misalignment would prove crucial.

As indicated in figure 1, though the real exchange rate has moved closely with the nominal exchange rate, the two have moved in.

"Determinants of Venezuela’s Equilibrium Real Exchange Rate," IMF Working Papers 06/74, International Monetary Fund. Francisco Maeso–Fernandez & Chiara Osbat & Bernd Schnatz, " Determinants of the Euro Real Effective Exchange Rate: A BEER/PEER Approach," Australian Economic Papers, Wiley Blackwell, vol.

41(4), pagesDecember. Frenkel, J.A. () ‘On the Mark: A Theory of Floating Exchange Rates Based on Real Interest Rate Differentials’, American Economic Rev pp.

– Google Scholar Frenkel, J.A. () ‘The Collapse of Purchasing Power Parities during the ’s’, European Economic Review, 16, pp. –   Real exchange rate behavior is at the centre of policy debates because exchange rates play a fundamental role in global trading and portfolio investments.

This study applies the VAR model. Money and Monetary Policy, Money and Monetary Policy, real exchange rates, co-integration, exchange rate Also of Interest Understanding Inflation Inertia in Angola. The NATREX approach offers an alternative paradigm to the Purchasing Power Parity for equilibrium real exchange rates.

NATREX is the acronym for NATural Real EXchange, referring to a medium‐run, inter‐cyclical equilibrium real exchange rate, determined by real, fundamental factors. Importantly, the NATREX is a moving equilibrium real exchange rate, responding to continual changes in.

Fig. 1 shows the evolution of real effective exchange rates and main variables, that are considered to be the determinants of real exchange rates in Turkey. Panel A depicts the changes in real effective exchange rate for Turkish Lira (TL).

TL has depreciated approximately 30–40 percent following both and crises. The equilibrium real exchange rate (ERER) is estimated using the auto-regressive distributed lag (ARDL) model by considering key macroeconomic fundamentals of the determinants of RER.

Zivot and Andrews’ unit root with structural break is used to test the stationarity property of data. The impact of exchange rate misalignment on economic growth has been examined using ARDL and variance.

Aside from factors such as interest rates and inflation, the currency exchange rate is one of the most important determinants of a country's relative level of economic ge rates. Moreover, the real exchange rate is argued to influence balance of payment of a country.

Therefore it is important to determine factors that influence the real exchange rate (Miyakoshi, ). A suitable or targeted level of the real exchange rate can be achieved through influencing the real exchange rate determinants. The aim of this paper is to review and examine a collection of ‘most commonly applied’ theoretical and empirical models of equilibrium exchange rate.

The presentation on each model starts with an introduction of core theoretical frameworks. It will then be followed by discussions on relevant empirical steps to estimate the equilibrium rate.

As noted by MacDonald () Behavioral Equilibrium Exchange Rates (BEERs) is another notion that determine the behavior of exchange rate. The BEERs includes both current and capital account items of the balance of payments as determinants of real exchange rate behavior.

This approach capture a set of long-run and medium. give scant attention to determinants of the equilibrium long-run level, lim j→∞ E t(q t+j+1). Equation (4) shows that q t in this case depends only on the behavior of current and expected future real interest rates in the domestic and foreign countries.

In sticky-price monetary models, the proximate determinant of ex ante real interest. additional determinants of the real exchange rate. In this framework – and by contrast with the FEER approach – the equilibrium exchange rate is computed using the current levels of the fundamental factors, but in some studies they are also broken down into permanent and transitory components.

In all of these studies, the. condition. Hence, a sustainable real exchange rate within a stock-flow framework can in principle account for both internal and external macroeconomic (flow) balance.5 Determinants of the equilibrium real exchange rate also include factors that affect the net trading position of.

This study concerns about how much economic factors have impact on real exchange rate equilibrium and how much exchange rate misalignment occurs.

The objective is to find the level of real exchange rate equilibrium before and during the crisis. Real exchange rate equilibrium is founded from Behavioral Equilibrium Excange Rate approach. From regression estimation we will find real exchange rate.

The fact that a major short-run determinant of the exchange rate, foreign and domestic interest rates, moves around a lot helps to explain why the foreign exchange market is volatile.

That market is also volatile because expectations of many things, including future differential price levels, productivity, and trading levels, will affect it via.

Real exchange rate misalignments and economic performance for the G20 countries. Audrey Sallenave (). NoEconomiX Working Papers from University of Paris Nanterre, EconomiX Abstract: We evaluate the growth effects of real effective exchange rate misalignments for the G20 countries over the period To this end, we first estimate real effective equilibrium exchange rates.

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 countries.

Run Real Exchange Rate: The Case of Taiwan Hsiu-Ling Wu Introduction The real exchange rate between two countries' currencies has been recognized as a key measure of the prices of foreign goods relative to domestic goods in those countries.

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Since the real exchange rate reveals the. 2. Real equilibrium exchange rate determinants. Following Edwards (), we estimate the equilibrium real exchange rate value using a theoretical model, where the simultaneous equilibrium of the current balance and the tradable good market is realized (see Emre et al, ).2 The Natural Real Exchange Rate of the United States Dollar, and Determinants of Capital Flows 3 The Dynamics of the Real Exchange Rate and Current Account in a Small Open Economy: Australia 4 The Natural Real Exchange Rate Between the French .The Equilibrium Real Exchange Rate: Evidence from Turkey C.

Emre Alper, Department of Economics and Center for Economics and Econometrics, Bogazici University, E-mail: [email protected] Ismail Saglam*, Department of Economics and Center for Economics and Econometrics, Bogazici University Abstract This aim the paper is to scrutinize whether the equilibrium exchange rate framework could.