Financial Liberalization, Structural Change, and Real Exchange Rate Appreciations

Financial Liberalization, Structural Change, and Real Exchange Rate Appreciations
Author :
Publisher : International Monetary Fund
Total Pages : 42
Release :
ISBN-10 : 9781451982077
ISBN-13 : 1451982070
Rating : 4/5 (070 Downloads)

Book Synopsis Financial Liberalization, Structural Change, and Real Exchange Rate Appreciations by : Carlos Urrutia

Download or read book Financial Liberalization, Structural Change, and Real Exchange Rate Appreciations written by Carlos Urrutia and published by International Monetary Fund. This book was released on 2010-03-01 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: We account for the appreciation of the real exchange rate in Mexico between 1988 and 2002 using a two sector dynamic general equilibrium model of a small open economy with two driving forces: (i) differential productivity growth across sectors and (ii) a decline in the cost of borrowing in foreign markets. These two mechanisms account for 60 percent of the decline in the relative price of tradable goods and explain a large fraction of the reallocation of labor across sectors. We do not find a significant role for migration remittances, foreign reserves accumulation, government spending, terms of trade, or import tariffs.


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