Modeling Real Exchange Rate Persistence in Chile
AbstractThe long and persistent swings in the real exchange rate have for a long time puzzled economists. Recent models built on imperfect knowledge economics seem to provide a theoretical explanation for this persistence. Empirical results, based on a cointegrated vector autoregressive (CVAR) model, provide evidence of error-increasing behavior in prices and interest rates, which is consistent with the persistence observed in the data. The movements in the real exchange rate are compensated by movements in the interest rate spread, which restores the equilibrium in the product market when the real exchange rate moves away from its long-run benchmark value. Fluctuations in the copper price also explain the deviations of the real exchange rate from its long-run equilibrium value. View Full-Text
Scifeed alert for new publicationsNever miss any articles matching your research from any publisher
- Get alerts for new papers matching your research
- Find out the new papers from selected authors
- Updated daily for 49'000+ journals and 6000+ publishers
- Define your Scifeed now
Salazar, L. Modeling Real Exchange Rate Persistence in Chile. Econometrics 2017, 5, 29.
Salazar L. Modeling Real Exchange Rate Persistence in Chile. Econometrics. 2017; 5(3):29.Chicago/Turabian Style
Salazar, Leonardo. 2017. "Modeling Real Exchange Rate Persistence in Chile." Econometrics 5, no. 3: 29.
Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.