The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Real Exchange Rates

  • Menzie D. Chinn
Reference work entry


The real exchange rate plays a central role in the open economy. This article describes the various ways in which the real exchange rate has been defined in the literature. It also examines the theoretical and empirical determinants of this variable.


Exchange rate dynamics Nominal exchange rates Productivity Purchasing power parity Real exchange rates Sticky prices Terms of trade Tradable and non-tradable goods Unit roots 

JEL Classifications

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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Menzie D. Chinn
    • 1
  1. 1.