Globalization, exports, and effective exchange rate indices

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

6 Citations (Scopus)

Abstract

This paper offers a new way of compiling effective exchange rate indices, which is then shown to perform generally better in prototype equations explaining total real exports than other published indices. Researchers can use this method to compile effective exchange rates, real or nominal, readily for any country. The generally superior performance, based on cointegration tests using data from four major economies, four Latin American countries, and four South East Asian countries, suggests the proposed index which uses GDP weights rather than trade weights, is more appropriate in a highly globalized world. Intensified globalization in the past two decades appears indicated by the higher elasticities of exports with respect to the real effective exchange rate over time.
Original languageEnglish
Pages (from-to)996-1007
Number of pages12
JournalJournal of International Money and Finance
Volume31
Issue number5
DOIs
Publication statusPublished - 1 Dec 2012

Fingerprint

Globalization
Exchange rates
Real effective exchange rate
Elasticity
Prototype
Asian countries
Cointegration test
Latin American countries

Keywords

  • Effective exchange rate indices
  • Estimated exports functions
  • GDP-weighted effective exchange rates
  • Globalization
  • Real effective exchange rate indices

Cite this

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title = "Globalization, exports, and effective exchange rate indices",
abstract = "This paper offers a new way of compiling effective exchange rate indices, which is then shown to perform generally better in prototype equations explaining total real exports than other published indices. Researchers can use this method to compile effective exchange rates, real or nominal, readily for any country. The generally superior performance, based on cointegration tests using data from four major economies, four Latin American countries, and four South East Asian countries, suggests the proposed index which uses GDP weights rather than trade weights, is more appropriate in a highly globalized world. Intensified globalization in the past two decades appears indicated by the higher elasticities of exports with respect to the real effective exchange rate over time.",
keywords = "Effective exchange rate indices, Estimated exports functions, GDP-weighted effective exchange rates, Globalization, Real effective exchange rate indices",
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Globalization, exports, and effective exchange rate indices. / HO, Lok Sang.

In: Journal of International Money and Finance, Vol. 31, No. 5, 01.12.2012, p. 996-1007.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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N2 - This paper offers a new way of compiling effective exchange rate indices, which is then shown to perform generally better in prototype equations explaining total real exports than other published indices. Researchers can use this method to compile effective exchange rates, real or nominal, readily for any country. The generally superior performance, based on cointegration tests using data from four major economies, four Latin American countries, and four South East Asian countries, suggests the proposed index which uses GDP weights rather than trade weights, is more appropriate in a highly globalized world. Intensified globalization in the past two decades appears indicated by the higher elasticities of exports with respect to the real effective exchange rate over time.

AB - This paper offers a new way of compiling effective exchange rate indices, which is then shown to perform generally better in prototype equations explaining total real exports than other published indices. Researchers can use this method to compile effective exchange rates, real or nominal, readily for any country. The generally superior performance, based on cointegration tests using data from four major economies, four Latin American countries, and four South East Asian countries, suggests the proposed index which uses GDP weights rather than trade weights, is more appropriate in a highly globalized world. Intensified globalization in the past two decades appears indicated by the higher elasticities of exports with respect to the real effective exchange rate over time.

KW - Effective exchange rate indices

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KW - GDP-weighted effective exchange rates

KW - Globalization

KW - Real effective exchange rate indices

UR - http://commons.ln.edu.hk/sw_master/377

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