Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 1 of 1
Full-Text Articles in Economics
Testing The Equilibrium Exchange Rate Model, Sergio Da Silva, Guilherme Moura
Testing The Equilibrium Exchange Rate Model, Sergio Da Silva, Guilherme Moura
Sergio Da Silva
We find favorable evidence for the textbook equilibrium exchange rate model of Stockman using Blanchard and Quah’s decomposition. Real shocks are shown to account for more than 90 percent of movements in the real exchange rate between Brazil and the United States of America, and for more than half of the nominal exchange rate changes. Impulse response functions also suggest that real shocks alter these countries’ relative prices.