The Real Exchange Rate: Assessment and Trade Impact in the Context of Fiji and Samoa

By Jan Gottschalk, Carl Miller, Lanieta Rauqeuqe, Isoa Wainiqolo, Yongzheng Yang

August 8, 2016

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Format: Chicago

Jan Gottschalk, Carl Miller, Lanieta Rauqeuqe, Isoa Wainiqolo, and Yongzheng Yang. The Real Exchange Rate: Assessment and Trade Impact in the Context of Fiji and Samoa, (USA: International Monetary Fund, 2016) accessed November 8, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper provides an assessment of real exchange rate measures and their impact on trade performance with special reference to two Pacific island countries, Fiji and Samoa. The analysis shows that the commonly used CPI-based real effective exchange rate (REER) measure provides a useful starting point of assessment, but alternative measures based on other price and cost indices should be used to check the robustness of the results, particularly given the large impact of global commodity prices on small open economies. The paper also offers some illustrations of how to quantify the impact of exchange rate movements on trade, especially in the face of data constraints in small open economies.

Subject: Exchange rates, Foreign exchange, Imports, International trade, Price elasticity, Prices, Real effective exchange rates, Real exchange rates

Keywords: CPI basket, Exchange rate, Exchange rates, Fiji, GDP deflator, Global, Imports, Nominal exchange rate, Pacific, Price competitiveness, Price differential, Price elasticity, Price elasticity, Real effective exchange rates, Real exchange rates, REER measure, Samoa, Tourism price indicator, Trade, Trade balance, Trading partner, U.S. dollar, WP

Publication Details

Pages:

31
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2016/168
Stock No:

WPIEA2016168
ISBN:

9781475523973
ISSN:

1018-5941

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