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To Smooth or Not to Smooth—The Impact of Grants and Remittances on the Equilibrium Real Exchange Rate in Jordan

This paper estimates the effect of grants and workers' remittances on Jordan's long-term equilibrium real exchange rate. We estimate an equilibrium path for the Jordanian real exchange rate using the Johansen cointegration methodology over the period 1964 to 2005. Controlling for other fun...

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Bibliographic Details
Main Author: Petri, Martin
Other Authors: Saadi Sedik, Tahsin
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2006
Series:IMF Working Papers
Subjects:
Outward Remittances
Terms Of Trade
Currency; Foreign Exchange
Economic Policy; Nternational Cooperation
Real Effective Exchange Rates
Exports And Imports
International Economics
Emigrant Remittances
Foreign Exchange
Real Exchange Rates
Empirical Studies Of Trade
Exchange Rates
Remittances
Jordan
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:This paper estimates the effect of grants and workers' remittances on Jordan's long-term equilibrium real exchange rate. We estimate an equilibrium path for the Jordanian real exchange rate using the Johansen cointegration methodology over the period 1964 to 2005. Controlling for other fundamentals, we find that both grants and workers' remittances appreciate the equilibrium real exchange rate in a statistically and economically significant way. We also find that assessing deviations of the actual real exchange rate from the estimated equilibrium real exchange rate is nontrivial because different smoothing methodologies and the nonsmoothed estimates give very different results
Physical Description:37 pages
ISBN:9781451865172

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