Open AccessFramework for Deriving Real Exchange Rates
Author(s) -
Usman Afridi,
Rehana Siddiqui
Publication year - 1994
Publication title -
pakistan development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.154
H-Index - 26
ISSN - 0030-9729
DOI - 10.30541/v33i4iipp.1099-1112
Subject(s) - purchasing power parity , disequilibrium , exchange rate , econometrics , economics , path (computing) , computer science , macroeconomics , medicine , ophthalmology , programming language
In the last conference we presented a study on PurchasingPower Parity (PPP) and Real Exchange Rates (RER). One of the conclusionswe reached was that a PPP-based measure of the RER did not givesufficient insight into the structural problems underlyingdisequilibrium situation for Real Exchange Rates. We present a review ofrecent studies which model the path of Real Exchange Rates determined bysets of determinants. These determinants are usually difficult toquantify and are often represented by proxies. We have reservationsabout both the choice of some determinants and also appropriativeness ofthe proxies used to represent them. The purpose of this paper is tocritically evaluate frameworks for determining real exchange rates indeveloping countries. We would suggest a basis for estimation of RER andits equilibrium path.