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

Author/Editor:

Jan Gottschalk ; Carl Miller ; Lanieta Rauqeuqe ; Isoa Wainiqolo ; Yongzheng Yang

Publication Date:

August 8, 2016

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

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.

Series:

Working Paper No. 16/168

Subject:

English

Publication Date:

August 8, 2016

ISBN/ISSN:

9781475523973/1018-5941

Stock No:

WPIEA2016168

Format:

Paper

Pages:

31

Please address any questions about this title to publications@imf.org