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

32 Pages Posted: 9 Dec 2016

See all articles by Jan Gottschalk

Jan Gottschalk

International Monetary Fund (IMF) - Policy Development and Review Department

Carla Miller

Harvard University - Edmond J. Safra Center for Ethics

Lanieta Rauqeuqe

International Monetary Fund (IMF)

Isoa Wainiqolo

International Monetary Fund (IMF)

Yongzheng Yang

International Monetary Fund (IMF) - African Department

Date Written: August 2016

Abstract

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

Gottschalk, Jan and Miller, Carla and Rauqeuqe, Lanieta and Wainiqolo, Isoa and Yang, Yongzheng, The Real Exchange Rate: Assessment and Trade Impact in the Context of Fiji and Samoa (August 2016). IMF Working Paper No. 16/168. Available at SSRN: https://ssrn.com/abstract=2882605

Jan Gottschalk (Contact Author)

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Washington, DC 20431
United States

Carla Miller

Harvard University - Edmond J. Safra Center for Ethics ( email )

124 Mount Auburn Street
Suite 520N
Cambridge, MA 02138
United States

Lanieta Rauqeuqe

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Isoa Wainiqolo

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Yongzheng Yang

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States
202-623-4339 (Phone)
202-623-4237 (Fax)

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