We con...rm the presence of substantial non-linearities in real exchange rate dynamics at the sectoral level. There exists zones where arbitrage is not pro...table because of transaction costs, and thus mean reversion is inexistent. We compute the speed of mean reversion of sector speci...c real exchange rates, conditional on the existence of arbitrage as implied by our non-linear estimations, ...

Recent empirical research documents that an exogenous rise in government purchases in a given country triggers a persistent depreciation of its real exchange rate— which raises an important puzzle, as standard macro models predict an appreciation of the real exchange rate. This paper presents a simple model with limited international risk sharing that can account for the empirical real exchange...

This paper explores the effect of income inequality on the real exchange rate, through two general equilibrium channels: (i) the aggregation of individual demands derived from non-homothetic preferences; (ii) the workings of Samuelson-Balassa through the effect of inequality on the aggregation of human capital. A variety of effects are possible depending on the sectoral expenditure elasticities...

The long and persistent swings in the real exchange rate have for a long time puzzled economists. Recent models built on imperfect knowledge economics seem to provide a theoretical explanation for this persistence. Empirical results, based on a cointegrated vector autoregressive (CVAR) model, provide evidence of error-increasing behavior in prices and interest rates, which is consistent with th...

This study measures the proportion of U.S. real exchange rate movements that can be accounted for by movements in the relative prices of nontraded goods. The decomposition is done at all possible horizons that the data allow—from one month up to 30 years. The accounting is performed with five different measures of nontraded-goods prices and real exchange rates, for exchange rates of the United ...

In this paper we argue that the primary force behind the large drop in real exchange rates that occurs after large devaluations is the slow adjustment in the price of nontradable goods and services. Our empirical analysis uses data from five large devaluation episodes: Argentina (2001), Brazil (1999), Korea (1997), Mexico (1994), and Thailand (1997). We conduct a detailed analysis of the Argent...

This paper examines the effect of changes in the real exchange rate on skill upgrading in the case of Chile. Using plant-level data from the manufacturing sector we find that a real depreciation increases the share of skilled workers in the total wage bill in exporters but not in non-exporters. This result suggests that depreciations or, more generally, increases in export profitability, may in...

____________________ The research presented in this paper is work that Ofair Razin completed for his doctoral dissertation. It was a pleasure to advise him in his doctoral work and to prepare this paper for publication, in his memory.

This study investigates factors affecting tourism demands in Selected OIC Countries for the period of 2004 to 2016. The economic variables used in this study are tourist receipts, GDP per capita, real exchange rate, population, Trade openness and Consumer Price Index. GLS method is applied in the research model in order to investigate the relationship between tourist receipts, GDP per capita, r...

Making capital and investment is the main driving forces of economic development. Based on the investment sensitivity to the changes of some of macro-economic variables and risk and uncertainty, the present study evaluated the effective factors on investment in private sector in Iran during 1980-2007. At first, the uncertainty variables of real informal exchange rate, nominal interest rate and ...