The Real Exchange Rate: Assessment and Trade Impact in the Context of Fiji and Samoa
32 Pages Posted: 9 Dec 2016
Date Written: August 2016
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.
Keywords: Real exchange rates, Fiji, Samoa, Tourism, Demand, Real effective exchange rates, Balance of trade, Exports, Consumer price indexes, Exchange rate, trade, Pacific, Fiji, Samoa
JEL Classification: F30, F40
Suggested Citation: Suggested Citation