On openness and real exchange rate volatility

We address the puzzle concerning the inverse relationship between openness and real exchange rate volatility. We argue that the relationship can be explained by increased openness facilitating purchasing power parity. Using New Zealand data, we show that increased openness prolongs real exchange regimes characterised by fast mean-reversion and low volatility.

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Year of publication:	2008
Authors:	Holmes, Mark J. ; Bano, Sayeeda
Published in:	Economics Bulletin. - AccessEcon, ISSN 1545-2921. - Vol. 6.2008, 14, p. 1-12
Publisher:	AccessEcon

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Extent:	application/pdf
Type of publication:	Article
Language:	English
Classification:	F4 - Macroeconomic Aspects of International Trade and Finance ; F1 - Trade
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005094567