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Article
Accounting for Real Exchange Rate Changes in East Asia
Journal of International Money and Finance (2007)
  • David C. Parsley
Abstract
This study measures the proportion of real exchange rate movements that can be accounted for by movements in the relative price of non-traded goods using the framework employed by Engel (1999). Among the twenty-one bilateral Asian-Pacific real exchange rates considered here, that proportion is found to be trivially small for all possible horizons that the data allow – from one month up to 25 years. This pattern appears unaffected by the cross-sectional variation in either income level, or the degree of openness present among these Pacific-Rim economies. The only qualifications occur when considering fixed (or semi-fixed) exchange rate regimes.
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Publication Date
January, 2007
Citation Information
David C. Parsley. "Accounting for Real Exchange Rate Changes in East Asia" Journal of International Money and Finance, forthcoming, 2007.