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Exchange Rate – Relative Price Nonlinear Cointegration Relationship in Malaysia

Author

Listed:
  • Venus Khim-Sen Liew

    (Labuan School of International Business and Finance, Universiti Malaysia Sabah)

  • Chee-Keong Choong

    (Faculty of Accountancy and Management, Universiti Tunku Abdul Rahman)

  • Evan Lau

    (Faculty of Economics and Business, Universiti Malaysia Sarawak)

  • Kian-Ping Lim

    (Labuan School of International Business and Finance, Universiti Malaysia Sabah)

Abstract

The finding of exchange rate–relative price nonlinear cointegration relationship in Malaysia, among others, suggests that nonlinear Purchasing Power Parity (PPP) equilibrium may be regarded as reference point in judging the short run misalignment of the Ringgit currency and thereby deducing effective policy actions. Moreover, economists who wish to extend the simple PPP exchange rate model into the more complicated monetary exchange models may do so comfortably, at least in the text of Malaysia. Nonetheless, such attempt should be tailored in a nonlinear way to suit the nonlinear characteristic of exchange rate behaviour

Suggested Citation

  • Venus Khim-Sen Liew & Chee-Keong Choong & Evan Lau & Kian-Ping Lim, 2005. "Exchange Rate – Relative Price Nonlinear Cointegration Relationship in Malaysia," Economics Bulletin, AccessEcon, vol. 6(11), pages 1-16.
    • Handle: RePEc:ebl:ecbull:eb-05f30006
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    References listed on IDEAS

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    Cited by:

    1. Brian Francis & Sunday Iyare, 2006. "Do exchange rates in caribbean and latin american countries exhibit nonlinearities?," Economics Bulletin, AccessEcon, vol. 6(14), pages 1-20.

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