Title: Equilibrium real exchange rate in Fiji: an empirical study

Authors: T.K. Jayaraman, Chee-Keong Choong

Addresses: Faculty of Business and Economics, School of Economics, University of the South Pacific, Suva, Fiji Islands. ' Centre for Economic Studies, Faculty of Business and Finance, Universiti Tunku Abdul Rahman (Perak Campus), Jalan Universiti, Bandar Barat, 31900 Kampar, Perak, Malaysia

Abstract: Given the fact that Fiji has a very narrow range of exportable commodities with a high degree of dependence on tourism earnings, maintenance of a competitive real exchange rate is of utmost importance. This paper undertakes an empirical analysis of Fiji|s real exchange rate, by estimating long-run equilibrium real exchange rate and examining the short-run dynamics of real exchange rates and detection of possible misalignment. Empirical investigation shows that there has been no large, persistent instance of misalignment of Fiji|s Real Effective Exchange Rate (REER).

Keywords: exchange rate misalignment; evaluation; monetary policy; cointegration; Granger causality; real exchange rates; Fiji.

DOI: 10.1504/IJMEF.2011.040921

International Journal of Monetary Economics and Finance, 2011 Vol.4 No.3, pp.238 - 253

Published online: 26 Jun 2011 *

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