Determinants of Uruguay's Real Effective Exchange Rate: A Mundell-Fleming Model Approach
Fuente:
arXiv
Salvato in:
| Autori principali: | , |
|---|---|
| Natura: | Preprint |
| Pubblicazione: |
2024
|
| Soggetti: | |
| Accesso online: | |
| Tags: |
Aggiungi Tag
Nessun Tag, puoi essere il primo ad aggiungerne!!
|
| _version_ | 1866914727865614336 |
|---|---|
| author | Islam, Didarul Faisal, Mohammad Abdullah Al |
| author_facet | Islam, Didarul Faisal, Mohammad Abdullah Al |
| contents | This study examines the factors influencing the short-term real effective exchange rate (REER) in Uruguay by applying an extended Mundell-Fleming model. Analyzing the impact of the US lending rate (USLR), money supply (M2), inflation (CPI), and the world interest rate (WIR), the paper uses a linear regression model with Newey-West standard errors. Key findings reveal that an increase in the USLR, CPI, and M2 is associated with a depreciation of the REER. In contrast, WIR shows no significant impact. These findings are consistent with the theoretical expectations of the Mundell-Fleming model regarding open economies under floating exchange rates. Therefore, authorities should tighten monetary policy, control inflation, adjust fiscal strategies, and boost exports in response to Peso depreciation. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2403_16452 |
| institution | arXiv |
| publishDate | 2024 |
| record_format | arxiv |
| spellingShingle | Determinants of Uruguay's Real Effective Exchange Rate: A Mundell-Fleming Model Approach Islam, Didarul Faisal, Mohammad Abdullah Al General Economics Economics This study examines the factors influencing the short-term real effective exchange rate (REER) in Uruguay by applying an extended Mundell-Fleming model. Analyzing the impact of the US lending rate (USLR), money supply (M2), inflation (CPI), and the world interest rate (WIR), the paper uses a linear regression model with Newey-West standard errors. Key findings reveal that an increase in the USLR, CPI, and M2 is associated with a depreciation of the REER. In contrast, WIR shows no significant impact. These findings are consistent with the theoretical expectations of the Mundell-Fleming model regarding open economies under floating exchange rates. Therefore, authorities should tighten monetary policy, control inflation, adjust fiscal strategies, and boost exports in response to Peso depreciation. |
| title | Determinants of Uruguay's Real Effective Exchange Rate: A Mundell-Fleming Model Approach |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2403.16452 |