Sources of Real Exchange Rate Fluctuations in the Nordic Countries

Arbeitspapier

In an attempt to move beyond the purchasing power parity hypothesis, this paper studies two issues. First, the causes of movements of real exchange rates are investigated. In contrast to the typical result, supply shocks are found to dominate the long-run variance decompositions for all countries. This suggests that productivity developments are the most important determinant of long-run movements in real exchange rate. A second topic is the relative importance of stationary and non-stationary components of real exchange rates. Also in contrast to previous findings, transitory shocks are more important than permanent shocks for three of the four countries.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Sveriges Riksbank Working Paper Series ; No. 90

Classification and Topics

• Classification: Wirtschaft ; Monetary Policy, Central Banking, and the Supply of Money and Credit: General
• Subject: Real exchange rate ; Purchasing power parity ; Nordic countries

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Alexius, Annika
• Event: Veröffentlichung
• (who): Sveriges Riksbank
• (where): Stockholm
• (when): 1999

Further information

• Handle: http://hdl.handle.net/10419/82400
• Last update: 10.03.2025, 11:43 AM CET