Real exchange rates

Real exchange rates

Exchange rates that have been adjusted for the inflation differential between two countries.

Real Exchange Rates

The purchasing power of two currencies relative to one another. While two currencies may have a certain exchange rate on the foreign exchange market, this does not mean that goods and services purchased with one currency cost the equivalent amounts in another currency. This is due to different inflation rates with different currencies. Real exchange rates are thus calculated as a nominal exchange rate adjusted for the different rates of inflation between the two currencies. See also: Purchasing power parity.
References in periodicals archive ?
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.
Pages (2004), "Effects of Tariffs and Real Exchange Rates on Job Reallocation: Evidence from Latin America," The Journal of Policy Reform 7(4): 191-208.
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.

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