Since Engel-type real exchange rate
variance decomposition exercises may underestimate the importance of the relative price of non-traded goods, in this paper I use a different approach.
The purpose of this article is, therefore, to determine the effect of the real exchange rate
on Colombia's total industrial employment and on 59 of the country's industrial sectors for the period 2000-2010.
The Central Bank increases policy rate in response to a rise in the foreign interest rate if [delta] > 0 and is assumed to cut down the policy rate in response to an appreciation of real exchange rate
according to the Uncovered Interest rate Parity (UIP) condition.
Before examining the linkage between real exchange rate
, portfolio flow and industrial production, it is first necessary to distinguish between short-term and long-term uncertainty using the local level model.
Inflation, growth, and the real exchange rate
under inflation targeting
The real exchange rate
trend has been computed using bilateral real exchange rate
with US dollar.
This problem is especially apparent in the study of real exchange rate
movements among high-income, financially developed countries with floating exchange rates.
8) In commodity exporting economies, a positive correlation between the terms of trade and the real exchange rate
may, for example, be the result of stronger domestic demand from higher export prices.
Thus, monetary policy cannot be used to initiate changes in the real exchange rate
designed to achieve some domestic goal if this involves changing the nominal exchange rate.
Internationally there has been a drive towards estimating real exchange rate
behaviour using non-linear models.
In this paper, however, to move forward with Baxter's (1994) emphasis on the importance of the trend-cycle decomposition, we consider the following questions: What is an exchange rate model that: (1) consists of both permanent and transitory components; (2) has a relationship only between the transitory component of the real exchange rate
and real interest differentials; and (3) allows us to decompose the real exchange rate
into those two components in certain way(s)?
50) Log real exchange rate
S/RMB PPI/PPI -- CH/US Log real exchange rate
(1-Lag) -- Los real exchange rate
(2-Lag) -- Log real exchange rate
(3-Lag) -- Log China's price index -045** (-3.