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| Hilde Bjørnland |
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| ''Estimating the equilibrium real exchange rate in Venezuela'' |
| ( 2004, Vol. 6 No.6 ) |
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| To determine whether the real exchange rate is misaligned with respect to its long-run equilibrium is an important issue for policy makers. This paper clarifies and calculates the concept of the equilibrium real exchange rate, using a structural vector autoregression (VAR) model. By imposing long-run restrictions on a VAR model for Venezuela, four structural shocks are identified: Nominal demand, real demand, supply and oil price shocks. The identified shocks and their impulse responses are consistent with an open economy model of economic fluctuations and highlight the role of the exchange rate in the transmission mechanism of an oil-producing country. |
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| Keywords: |
JEL: F3 - International Finance: General
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| Manuscript Received : May 10 2004 | | Manuscript Accepted : Jul 01 2004 |
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