Australia’s Medium-run Exchange Rate: A Macroeconomic Balance Approach

Nikola Dvornak, Marion Kohler and Gordon Menzies
Additional contact information
Nikola Dvornak: Reserve Bank of Australia

RBA Research Discussion Papers from Reserve Bank of Australia

Abstract: We analyse the determinants of Australia’s exchange rate in terms of the approach introduced by Williamson (1983), based on the simultaneous attainment of internal and external balance. Internal balance implies that the economy is operating at its supply potential with no inflationary pressures. External balance is characterised as the sustainable net flow of resources (corresponding to a current account to GDP ratio) between countries when they are in internal balance. The approach provides estimates of the medium-term exchange rate associated with a given current account position, although the estimates are highly sensitive to variations in key parameters.

Keywords: current account; equilibrium exchange rates; terms of trade (search for similar items in EconPapers)
JEL-codes: F31 F32 (search for similar items in EconPapers)
Date: 2003-03
New Economics Papers: this item is included in nep-ifn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.rba.gov.au/publications/rdp/2003/pdf/rdp2003-03.pdf (application/pdf)

Related works:
Journal Article: Australia's Medium‐Run Exchange Rate: A Macroeconomic Balance Approach (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rba:rbardp:rdp2003-03

Access Statistics for this paper

More papers in RBA Research Discussion Papers from Reserve Bank of Australia Contact information at EDIRC.
Bibliographic data for series maintained by Paula Drew ().