TY  - JOUR
AU  - Edwards,Sebastian
TI  - Real and Monetary Determinants of Real Exchange Rate Behavior:  Theory  and Evidence From Developing Countries
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2721
PY  - 1990
Y2  - April 1990
UR  - http://www.nber.org/papers/w2721
L1  - http://www.nber.org/papers/w2721.pdf
N1  - Author contact info:
Sebastian Edwards
UCLA Anderson Graduate School of Business
110 Westwood Plaza, Suite C508
Box 951481
Los Angeles, CA 90095-1481
Tel: 310/206-6797
Fax: 310/206-5825
E-Mail: sebastian.edwards@anderson.ucla.edu
AB  - This paper develops a dynamic model of real exchange rate behavior in developing countries. A three goods economy (exportables, importables and nontradables) is considered. Residents of this country hold domestic and foreign assets, and there is a dual exchange rate regime. There is a government that consumes importables and nontradables. A distinction is made between equilibrium and disequilibrium movements of the RER. The determinants of real exchange rate misalignment are studied with emphasis placed on the role of devaluations and balance of payments crisis. The implications of the model are tested using data for 12 developing countries. The results obtained are generally favorable for the model. The issue of RER stationarity is also analyzed.
ER  -