THE ROLE OF COMMODITY TERMS OF TRADE IN DETERMINING THE REAL EXCHANGE RATES OF MEDITERRANEAN COUNTRIES

Juan Cuestas, Javier Ordóñez and Mariam Camarero

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: The aim of this paper is to investigate whether there exists a long run relationship between the real exchange rate and the commodity terms of trade in the so-called ¿Mediterranean¿ or MENA countries. These economies are good candidates for this type of formulation, as they can be considered commodity exporting countries. Using cointegration techniques, we find long run relationships linking the real exchange rate and a commodity-based measure of the terms of trade. Thus, commodity terms of trade are a potential explanation for the apparent non-stationarity of MENA countries real exchange rate previously found in the empirical literature.

Keywords: género; consejo de administración; valor de la empresa; endogeneidad real exchange rate; terms of trade; commodity prices (search for similar items in EconPapers)
JEL-codes: C22 F31 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2007-07
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2007-15

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