Research Discussion Paper – RDP 9811 Effective Real Exchange Rates and Irrelevant Nominal Exchange-Rate Regimes


This paper was commenced while the authors were graduate students at the Massachusetts Institute of Technology. We would like to thank Rudi Dornbusch, Jaume Ventura, Jushan Bai, Michael Mussa, Whitney Newey, Philip Lowe and David Gruen for their helpful suggestions. This work has benefited from many helpful comments from the participants of the MIT International Economics and Macroeconomics Lunches. Any remaining errors are ours. We are extremely grateful to Ilan Goldfajn and Rodrigo O. Valdes for kindly providing us with real exchange rate data. The views expressed are those of the authors and should not be attributed to either the Reserve Bank of Australia or McKinsey and Company, Inc.


System Stability Department, Reserve Bank of Australia [*]

McKinsey and Company, Inc., Boston, US [**]