Exchange Rate Policy and the Role of Non-Traded Goods Prices in Real Exchange Rate Fluctuations

2016 ◽  
Author(s):  
Nestor Azcona
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Exchange Rate Policy ◽  
Exchange Rate Fluctuations ◽  
Traded Goods ◽  
Rate Policy

Exchange rate policy and the role of non-traded goods prices in real exchange rate fluctuations

2017 ◽  
Vol 17 (2) ◽  
Author(s):  
Nestor Azcona
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Purchasing Power Parity ◽  
Flexible Exchange Rate ◽  
Exchange Rate Policy ◽  
Relative Price ◽  
The Real ◽  
Traded Goods ◽  
Fixed Exchange Rate

AbstractThis paper uses a DSGE model of two small open economies to explain certain features of real exchange rate cyclical fluctuations in countries with fixed and flexible exchange rates, focusing on the role of traded and non-traded goods prices. In particular, the model illustrates why the relative price of non-traded goods and the relative price between domestic and foreign traded goods are more volatile than the real exchange rate under a fixed exchange rate but not under a flexible exchange rate, why deviations from purchasing power parity for traded goods prices can be more volatile under a fixed exchange rate than under a flexible exchange rate, and why there is no correlation between the volatility of the real exchange rate and its variance decomposition.

The real equilibrium exchange rate in a commodity­exporting economy: the experience of Azerbaijan

2021 ◽  
pp. 25-38
Author(s):  
Vusal Gasimli ◽  
Vusala Jafarova
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Oil Prices ◽  
Exchange Rate Policy ◽  
Current Account Balance ◽  
Equilibrium Exchange Rate ◽  
Long Run ◽  
Equilibrium Exchange ◽  
Rate Policy ◽  
Relative Productivity

The case of Azerbaijan serves to study the adequacy of exchange-rate policy in a resource-rich economy. This paper analyses the behavior of Azerbaijan’s external accounts over the past twenty years. Declining oil prices made an existing exchange-rate peg unsustainable and led to a large devaluation in 2015. Since then, the current account balance has improved, but by less than expected. We use the EBA-Lite method to derive regression-based estimates of the equilibrium real exchange rate, and relate misalignments to measures of “policy gaps”. Our findings suggest that only a few years after the devaluation, Azerbaijan’s currency has once more become overvalued. Moreover, the equilibrium real exchange rate is volatile and hardly compatible with a long-run exchange rate peg. Exchange rate policy should try to accommodate shifts in the fundamental determinants such as relative productivity and real oil prices.

scholarly journals Capital Controls or Real Exchange Rate Policy? A Pecuniary Externality Perspective

2013 ◽  
Author(s):  
Gianluca Benigno ◽  
Huigang Chen ◽  
Alessandro Rebucci ◽  
Christopher Otrok ◽  
Eric Young
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Capital Controls ◽  
Exchange Rate Policy ◽  
Pecuniary Externality ◽  
Rate Policy

Statement by the Managing Director on the Independent Evaluation Office Report on IMF Exchange Rate Policy Advice

Policy Papers ◽  
2017 ◽  
Vol 2017 (57) ◽  
Author(s):  
Keyword(s):  
Exchange Rate ◽  
Policy Advice ◽  
Exchange Rate Policy ◽  
Independent Evaluation ◽  
Rate Policy ◽  
External Sector ◽  
The Imf

I would like to thank the Independent Evaluation Office (IEO) for preparing this informative and timely report, which provides an update on the IMF’s progress in its approach to exchange rate policy advice since 2007. I am pleased with its main finding that the IMF has substantially overhauled its approach to exchange rate policy advice, and concur that some issues need our continued attention. I would like to note that management and staff remain fully committed to the role of the External Sector Report (ESR) in Fund surveillance.

scholarly journals China’s Exchange Rate Policy: Forty Years of Reforms and Prospects

2020 ◽  
Vol 64 (12) ◽  
pp. 33-43
Author(s):  
I. Kudryashova
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Policy ◽  
Economic Relations ◽  
Monetary Authorities ◽  
Key Factor ◽  
Rate Policy ◽  
Product Manufacturing ◽  
Market Factors ◽  
State Interference

After four decades of reforms, China has become one of the biggest economies of the world and its exchange rate policy is a key factor in this process. The paper focuses on the conditions that have shaped the directions of China’s exchange rate policy at every stage of its evolution, the measures taken and the results achieved in terms of the policy’s effect on the economic growth and balance of payments. It is shown that active state interference in the exchange market policy in the early stages resulted in the undervalued yuan exchange rate and also encouraged positive dynamics of internal production due to the enhanced national export competitiveness. In subsequent stages, liberalization of China’s economy, its integration in the global economic relations, its bigger contribution to the global product manufacturing and export led to the increased role of market forces in the yuan exchange rate formation. Some practical measures taken in this direction encouraged the balanced yuan exchange rate, lower surplus of current accounts and increase in balance volatility of capital and financial accounts. Currently, the yuan exchange rate is still controlled. China’s monetary authorities mostly use international reserves to regulate the yuan exchange rate. The paper concludes that it is necessary to further increase the influence of market factors in the yuan exchange rate formation and diversification of the yuan stability instruments in order to maintain export growth rates, to develop China’s financial market and to expand the scope and international spheres of the yuan use.

scholarly journals Exchange Rate Policy and Export Promotion: Evidence from Uzbekistan

2020 ◽  
Vol 5 (5) ◽  
Author(s):  
Elmurod Abdusattorovich Hoshimov
Keyword(s):  
Exchange Rate ◽  
Export Performance ◽  
Export Promotion ◽  
Exchange Rate Policy ◽  
Theory And Practice ◽  
Rate Policy ◽  
The Republic ◽  
The Impact ◽  
Practical Recommendations

This article is devoted to the analysis of the impact of exchange rate policy on export performance in terms of theory and practice. In addition, the article presents developed scientific proposals and practical recommendations aimed at enhancing the promoting role of exchange rate policy in improving export performance of the Republic of Uzbekistan.

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