Real exchange rate conundrum : the case of Central America

Using data from a sample of Central American countries and Mexico, this paper demonstrates some contradictions that can occur in empirical applications of the real exchange rate.

Flessig, Adrian; Grennes, Thomas · 1991

Abstract

Nine measures of a Purchasing Power Parity-based real exchange rate are calculated using alternative measures of price indexes and quantity weights. The real exchange rate indexes are found to be sensitive to the prices and quantity weights chosen. In addition, alternative tests of Purchasing Power Parity can give contradictory results when the same Central American data set is used. (Author abstract)

Connected topics

Economic analysis748→

Classification

Document type: Studies & Literature Reviews
DEC type: Other USAID Supported Study/Document
Geography: Central AmericaMexico
Subject: Agricultural finance
DEC terms: CurrenciesEconomic analysisForeign exchange rates
Sponsoring organization: USAID. Bur. for Research and Development. Ofc. of Agriculture
Authoring organization: Abt Associates, Inc.
Language: English

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