Scandinavian Working Papers in Economics
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FIEF - Trade Union Institute for Economic Research Working Paper Series, FIEF - Trade Union Institute for Economic Research

No 180:
The Swedish Real Exchange Rate under Different Currency Regimes

Anna Larsson ()

Abstract: This paper presents evidence on the behavior of the Swedish real exchange rate relative to Germany under different currency regimes 1973:1-2001:4. The results suggest that the real exchange rate is cointegrated with Swedish and German productivity, which is consistent with Balassa (1964) and Samuelson (1964). In the short run, the regime has mattered for the dynamics of the real exchange rate. Deviations from equilibrium have been adjusted more quickly when the nominal exchange rate has been allowed to float freely, which indicates that it acts as a shock absorber.

Keywords: Real exchange rate; Exchange rate regimes; Cointegration; (follow links to similar papers)

JEL-Codes: C22; E31; F41; (follow links to similar papers)

29 pages, November 11, 2002, Revised September 18, 2003

This paper is a considerably revised version of my master thesis written at Stockholm University.

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This paper is published as:
Larsson, Anna, (2004), 'The Swedish Real Exchange Rate under Different Currency Regimes', Review of World Economics, Vol. 40, No. 4, pages 706-727

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