Misalignment of Real Exchange Rate with its Equilibrium Path: Case of Pakistan

Shah Hussain

SBP Research Bulletin, 2009, vol. 5, 1-14

Abstract: This study estimates the effects of fundamental factors on real exchange rate, determines the path of equilibrium real exchange rate on the basis of sustainable levels of fundamentals and identifies the sources of misalignment. It is found that the real exchange rate has remained historically overvalued in Pakistan. The major factors behind it have been capital inflows and public expenditures.

Keywords: fundamentals; real exchange rate; misalignment (search for similar items in EconPapers)
JEL-codes: E58 F31 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (2)

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