{"id":2773,"date":"2014-08-05T14:18:44","date_gmt":"2014-08-05T11:18:44","guid":{"rendered":"http:\/\/www.berjournal.com\/?p=2773"},"modified":"2014-08-05T16:59:07","modified_gmt":"2014-08-05T13:59:07","slug":"an-unpleasant-real-exchange-rate-arithmetic","status":"publish","type":"post","link":"https:\/\/www.berjournal.com\/tr\/an-unpleasant-real-exchange-rate-arithmetic","title":{"rendered":"An Unpleasant Real Exchange Rate Arithmetic"},"content":{"rendered":"\n\n\n\n
Article Information<\/td>\n<\/tr>\n
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Journal:<\/td>\nBusiness and Economics Research Journal<\/td>\n<\/tr>\n
Title of Article:<\/td>\nAn Unpleasant Real Exchange Rate Arithmetic<\/td>\n<\/tr>\n
Author(s):<\/td>\nMurat A. Y\u00fclek<\/td>\n<\/tr>\n
Volume:<\/td>\n5<\/td>\n<\/tr>\n
Number:<\/td>\n3<\/td>\n<\/tr>\n
Year:<\/td>\n2014<\/td>\n<\/tr>\n
Page:<\/td>\n1-13<\/td>\n<\/tr>\n
ISSN:<\/td>\n1309-2448<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n
Abstract<\/td>\n<\/tr>\n
Real exchange rates influence the competitiveness of tradable goods produced in a country, and thus the latter\u2019s external balance. In the short-run, real exchange rates are influenced by real, as well as monetary variables. With a view to maintain their competitiveness in international markets, exporters are expected not to prefer overvalued local currencies. Thus, the conventional wisdom suggests that the interests and lobbying power of exporters may be directed to the policy makers towards a healthier external trade and current account balance. This article studies the effect of import dependence and profitability\/branding levels of export firms on their real exchange rate preference. A simple partial analysis model shows that high import dependence may tilt exporters\u2019 preferences towards overvaluation, rather than equilibrium or undervaluation of the real exchange rate. The model also implies that this \u201cunpleasant real exchange rate arithmetic\u201d may trigger a vicious circle involving an increasing preference for overvaluation leading to an even higher import dependence. Intrinsic profitability\/brand equity of exporters, may partially reverse this preference for overvaluation; so this anomaly may rather relate to relatively less developed economies.<\/td>\n<\/tr>\n
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Keywords:<\/td>\nReal exchange rate, trade balance, external balance, beggar-thy-neighbor, brand equity<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n
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JEL Classification:<\/td>\nF40, F41<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Article Information Journal: Business and Economics Research Journal Title of Article: An Unpleasant Real Exchange Rate Arithmetic Author(s): Murat A. Y\u00fclek Volume: 5 Number: 3 Year: 2014 Page: 1-13 ISSN: 1309-2448 Abstract Real exchange rates influence the competitiveness of tradable goods produced in a country, and thus the latter\u2019s external balance. In the short-run, real […]<\/p>\n

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