Cover IMF Working Papers
Response of the Equilibrium Real Exchange Rate to Real Disturbances in Developing Countries
Author: Mr. Mohsin S. Khan and Mr. Jonathan David Ostry
Series:
IMF Working Papers
Volume/Issue:
Volume 1991: Issue 003
Language:
English
Publication Date:
01 Jan 1991
DOI:
https://doi.org/10.5089/9781451841800.001
ISBN:
9781451841800
ISSN:
1018-5941
Pages:
18
Keywords:
WP; exchange rate; exchange rate rule; real exchange rate
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Using a simple dependent - economy framework, this paper outlines the links between the equilibrium real exchange rate and some of its fundamental exogenous determinants, mainly terms of trade movements and commercial policy changes. Drawing on existing studies of trade flows in developing countries, it is possible to derive plausible quantitative ranges for the response of the equilibrium real exchange rate to both external and policy-induced shocks. The results should be particularly relevant in designing real exchange rate targets and rules that allow for movements in the equilibrium real exchange rate in response to various shocks.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund