Relationship between external wealth, trade balance, and the real exchange rate : a case study on the US.

• Main Authors: Chia, Andrew Teck Fatt., Tan, Jessica Pei Ying., Tan, Ming Hui.
• Other Authors: Chia Wai Mun
• Format: Final Year Project
• Language: English
• Published: 2010
• Subjects: DRNTU::Social sciences::Economic theory::International trade
• Online Access: http://hdl.handle.net/10356/42420
• Institution: Nanyang Technological University

Lane and Milesi-Ferreti (2002) show that a country’s external wealth, trade balance and the real exchange rate are interrelated. They shown that in the long-run, there is a negative relation between the trade balance and the real exchange rate. And that the magnitude of the trade balance coefficient...