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Real Exchange Rate Fluctuations in East Asia: Generalized Impulse‐Response Analysis
Author(s) -
Wang Ping,
Dunne Paul
Publication year - 2003
Publication title -
asian economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.345
H-Index - 28
eISSN - 1467-8381
pISSN - 1351-3958
DOI - 10.1111/1467-8381.00167
Subject(s) - exchange rate , economics , impulse response , panacea (medicine) , currency , east asia , monetary economics , econometrics , scope (computer science) , macroeconomics , geography , mathematics , computer science , mathematical analysis , archaeology , china , medicine , alternative medicine , pathology , programming language
Using generalised impulse response analysis, this paper investigates the dynamic adjustment of real exchange rates to real shocks for a group of East Asian currencies. The analysis reveals that the fundamentals, or real factors, explain some, but not all, of the variations of real exchange rates, and that the different disturbances have different degrees of importance for each currency. Therefore, there is no universal panacea for fluctuations in real exchange rates. The findings leave considerable scope for policy intervention to mitigate the unfavourable effects.