Real Exchange Rate Volatility and the Price of Nontradables in Sudden-Stop-Prone Economies:

This paper shows that the dominant view that the high variability of real exchange rates is due to movements in exchange rate-adjusted prices of tradable goods does not hold for Mexican data for periods with a managed exchange rate. The relative price of nontradables accounts for up to 70 percent of...

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1. Verfasser: Mendoza, Enrique G. (VerfasserIn)
Format: Elektronisch E-Book
Sprache:English
Veröffentlicht: Washington, D.C International Monetary Fund 2006
Schriftenreihe:IMF Working Papers Working Paper No. 06/88
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Zusammenfassung:This paper shows that the dominant view that the high variability of real exchange rates is due to movements in exchange rate-adjusted prices of tradable goods does not hold for Mexican data for periods with a managed exchange rate. The relative price of nontradables accounts for up to 70 percent of real exchange rate variability during these periods. The paper also proposes a model in which this fact, and the sudden stops that accompanied the collapse of Mexico''s managed exchange rates, could result from a Fisherian debt-deflation mechanism operating via nontradables prices in economies with dollarized liabilities
Beschreibung:1 Online-Ressource (34 p)
ISBN:1451863489
9781451863482

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