Working paper

### Determinants of the Equilibrium Real Exchange Rate.

Abstract:

This paper presents a compact derivation of the determinants of changes in the equilibrium real exchange rate (the price index of non-traded goods relative to traded goods) in a small open economy with any number of goods and factors. It is shown that the change in the real exchange rate equals a simple weighted sum of the differences between the marginal propensities to consume and the marginal propensity to produce individual non-traded goods. Implications of the result are noted for a vari...

### Authors

Volume:
209
Publication date:
1987-01-01
URN:
uuid:19604d51-0fc5-4c73-b6a0-4e1a51f269ea
Local pid:
oai:economics.ouls.ox.ac.uk:11733
Language:
English