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- Title
Disaggregate Real Exchange Rate Behaviour.
- Authors
Fazio, Giorgio; McAdam, Peter; MacDonald, Ronald
- Abstract
In this paper, we re-examine the “PPP Puzzle” using sectoral disaggregated data. Specifically, we first analyse the mean reversion speeds of real exchange rates for a number of different sectors in 11 industrial economies and then focus on relating these rates to variables identified in the literature as key determinants of CPI-based real exchange rates, namely: the trade balance, productivity and the mark up. In particular, we seek to understand to what extent the relationships existing at the aggregate level are borne out at the disaggregate level. We believe that this analysis can help shed light on the PPP puzzle.
- Subjects
FOREIGN exchange rates; INDUSTRIAL organization (Economic theory); BALANCE of payments; FOREIGN exchange accounting; CAPITAL productivity; FOREIGN trade regulation; MICROECONOMICS; ECONOMIC policy; RATES
- Publication
Open Economies Review, 2007, Vol 18, Issue 4, p389
- ISSN
0923-7992
- Publication type
Article
- DOI
10.1007/s11079-007-9055-3