How domestic economic conditions influence the real exchange rate [ORANI economic model; Australia]
1988
Higgs, P.J. (Melbourne Univ. (Australia). IMPACT Research Centre)
The real exchange rate is essentially an endogenous variable and therefore it is not legitimate to think of independent movements in the real exchange rate as determinants of trade performance. If concerned with the balance of trade on aggregate employment, we should concentrate on the effects of domestic economic policies on these variables directly, rather than on the real exchange rate.
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