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Real variables and the real exchange rate: The importance of traded goods in the transmission mechanism

Author

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  • Maxym Chaban

    (University of Saskatchewan)

Abstract

I find that real variables affect the real exchange rate almost entirely through the relative price of traded goods. This finding casts doubt on the theoretical literature that postulates that real shocks propagate only through the relative price of nontraded goods.

Suggested Citation

  • Maxym Chaban, 2006. "Real variables and the real exchange rate: The importance of traded goods in the transmission mechanism," Economics Bulletin, AccessEcon, vol. 6(1), pages 1-17.
    • Handle: RePEc:ebl:ecbull:eb-05f40004
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    File URL: http://www.accessecon.com/pubs/EB/2006/Volume6/EB-05F40004A.pdf
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    References listed on IDEAS

    as
    1. Neary, Peter, 1988. "Determinants of the Equilibrium Real Exchange Rate," American Economic Review, American Economic Association, vol. 78(1), pages 210-215, March.
    2. Charles Engel, 1999. "Accounting for U.S. Real Exchange Rate Changes," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 507-538, June.
    3. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72(6), pages 584-584.
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    Cited by:

    1. Chaban, Maxym, 2011. "Home bias, distribution services and determinants of real exchange rates," Journal of Macroeconomics, Elsevier, vol. 33(4), pages 793-806.

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    More about this item

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F3 - International Economics - - International Finance

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