What Determines Real Exchange Rates? The Nordic Countries

Anders Bergvall ()
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Anders Bergvall: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden

No 2002:15, Working Paper Series from Uppsala University, Department of Economics

Abstract: This paper presents a model yielding testable implications concerning the long-run co-movements of real exchange rates, relative productivity, the trade balance and terms of trade. Countries with higher productivity, trade deficits or improved terms of trade are found to have more appreciated real exchange rates, with the main channel of transmission working through the relative price of nontraded goods. Exogenous terms of trade shocks are found to be the most important determinant of long run movements in the real exchange rate for Denmark and Norway, while demand shocks account for most of the long run variance in the real exchange rate for Finland and Sweden.

Keywords: Real exchange rates; cointegration; variance decomposition (search for similar items in EconPapers)
JEL-codes: F31 F32 F41 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2002-08-18
New Economics Papers: this item is included in nep-cba, nep-ifn and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in Scandinavian Journal of Economics, 2004, pages 315-337.

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