|
| |
N° 285 |
  |
| 11 March 2009 |
| Terms of Trade and Exchange Rates: a Relationship Complicated by Anchor Policies |
Virginie Coudert
Cécile Couharde
Valérie Mignon |
|
| The terms of trade of commodity-exporting countries are directly affected by the large-scale swings of worldwide
prices. These terms of trade represent one of the key determinants of the real exchange rates of these economies.
By estimating long-term equilibrium exchange rates we can gauge their impact for oil exporters and for exporters
of other commodities. We then evaluate currency ‘misalignments’ as the discrepancies between the observed real
exchange rates and their equilibrium values. Can these misalignments themselves be explained? In countries whose
currencies are anchored to the dollar or to the euro, the misalignments are shown to depend on the behaviour of
the anchor currency. When the anchor currency appreciates, the anchored currencies tend to be overvalued; when it
depreciates, their undervaluation is likely. |
Abstract |
| |
|
| To visualise
the full text document, use Acrobat
Reader |
Full text (pdf) |
| |
|
|
|
|
|
|
|
