scholarly journals The Current Account and the Real Exchange Rate: A Structural VAR Analysis of Major Currencies

10.3386/w6495 ◽  
1998 ◽  
Author(s):  
Jaewoo Lee ◽  
Menzie Chinn
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Current Account ◽  
Structural Var ◽  
The Real ◽  
Var Analysis ◽  
The Current Account

scholarly journals Interlinkage Between Real Exchange Rate And Current Account Behaviors: Evidence From India

2015 ◽  
Vol 31 (4) ◽  
pp. 1199-1204
Author(s):  
Mohamed Arouri ◽  
Arif Billah Dar ◽  
Niyati Bhanja ◽  
Aviral Kumar Tiwari ◽  
Frederic Teulon
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Current Account ◽  
Current Account Deficit ◽  
Real Exchange Rates ◽  
Structural Var ◽  
Real Effective Exchange Rate ◽  
Effective Exchange ◽  
Positive Shock ◽  
The Current Account

The study analyzes the dynamic interlinkage between Indias real effective exchange rate and real current account deficit using standard VAR and structural VAR (SVAR). The empirical analysis suggests that a real currency appreciation leads to an improvement in the current account deficit, thereby highlighting the occurrence of permanent shocks such as technical innovations, productivity shocks, and changes in tastes and preferences. A positive shock to the current account deficit leads to an appreciation in the real exchange rate. Moreover, both current account and real exchange rates are found to be affected by the changes in these variables themselves rather than changes in the other variables in the system.

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