Specifically, I include lags of two variables not included in the baseline specification of the Taylor rule: an index of world commodity prices [[omega].sub.t] and country-specific effective
real exchange rates [Q.sub.t].
There was solid real wage growth and
real exchange rates reached record levels in 2007, only to collapse in 2008 and 2009.
Exchange rate volatility is measured by both GARCH model and the standard deviation of the first-difference of the monthly natural logarithm of bilateral
real exchange rates. The estimation results indicate that intra-East Asian trade is more discouraged by exchange rate volatility than other regions.
Through its innovative Local Exchange Networks (LENs) created with local financial institutions in each country, LumoXchange can provide cross border payments using the
real exchange rates at the local level.
A dynamic panel model with nonlinear smooth shifts in mean is specified for current accounts,
real exchange rates, and inflation rates, respectively.
Measuring and analyzing the effects of short-term volatility in
real exchange rates. The Review of Economics and Statistics, 311-315.
Can sticky price models generate volatile and persistent
real exchange rates? Review of Economic Studies, 69(3).
Ebrahimi (1993), Yavari (1995), Pedram (1998), Ghasemlou (1998), and Sanda- rajan, Lazare and William (1999), and Dargahi (2001) developed empirical models to explain the behaviour of
real exchange rates through economic fundamentals.
This is true because foreign trade in these countries is 'generally' invoiced in such currencies as the US dollar, the British Pound, and the Euro, therefore, abrupt fluctuations in
real exchange rates hurt the confidence of exporters and importers, which in turn accelerates the inflationary pressure.
(2012) examine the relationship between
real exchange rates and international portfolio flows during the period 1997-2009 for Egypt, Morocco, Nigeria and South Africa.
Demand management should be complemented by microeconomic or institutional actions that improve the economy's structure and raise its potential growth rate for any inflation and
real exchange rates.