Equilibrium Exchange Rate Estimation for Taka – A Co integration Analysis

Md. Akhtaruzzaman and Luthfe Ara Begum

Working Papers from eSocialSciences

Abstract: This paper is an attempt to know the equilibrium exchange rate of Taka to measure exchange rate misalignment. To estimate the equilibrium real exchange rate we use macroeconomic balance approach, which calculates the real exchange rate that is consistent with internal and external balance. Using Johansen (1995) cointegration method we were able to find a long run equilibrium relationship between exchange rate and fundamentals, which comprises of tot, openness, consgdp, remaid, dsex.

Keywords: Exchange rate policy; Equilibrium exchange rate; Misalignment; currencies; Taka; external competitiveness; cointegration; macroeconomic balance; export growth; demand; Bangladesh; remittance (search for similar items in EconPapers)
Date: 2015-08
Note: Institutional Papers
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