Are shocks to real effective exchange rates permanent or transitory? Evidence from Pacific Island countries

Research output: Contribution to journalArticleResearchpeer-review

9 Citations (Scopus)

Abstract

In this article, we consider the stability of the real effective exchange rates for four Pacific Island countries using the Lee and Strazicich (2003a, b) unit root test, which allows one to incorporate at most two structural breaks in the data series. Our main finding is that for Papua New Guinea and Samoa, exchange rates are stable, implying that shocks will have a transitory effect on real effective exchange rates, while for Fiji and the Solomon Islands we find exchange rates to be unstable, implying that shocks will have a permanent effect on real effective exchange rates.

Original languageEnglish
Pages (from-to)1053-1060
Number of pages8
JournalApplied Economics
Volume40
Issue number8
DOIs
Publication statusPublished - Apr 2008
Externally publishedYes

Cite this