Real Exchange Rates and Primary Commodity Prices

Joao Ayres, Constantino Hevia and Juan Pablo Nicolini

No 743, Working Papers from Federal Reserve Bank of Minneapolis

Abstract: In this paper, we show that a substantial fraction of the volatility of real exchange rates between developed economies such as Germany, Japan, and the United Kingdom against the US dollar can be accounted for by shocks that affect the prices of primary commodities such as oil, aluminum, maize, or copper. Our analysis implies that existing models used to analyze real exchange rates between large economies that mostly focus on trade between differentiated ?nal goods could benefit, in terms of matching the behavior of real exchange rates, by also considering trade in primary commodities.

Keywords: Primary commodity prices; Real exchange rate disconnect puzzle (search for similar items in EconPapers)
JEL-codes: F31 F41 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2017-11-13
New Economics Papers: this item is included in nep-opm
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Real exchange rates and primary commodity prices (2020)
Working Paper: Real Exchange Rates and Primary Commodity Prices (2019)
Working Paper: Real Exchange Rates and Primary Commodity Prices (2019)
Working Paper: Real Exchange Rates and Commodity Prices (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmwp:743

DOI: 10.21034/wp.743

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