Drivers of Real Exchange Rate in the Small Open Island of Mauritius

Drivers of Real Exchange Rate in the Small Open Island of Mauritius

Ashok Babubudjnauth

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α Open University of Mauritius

Drivers of Real Exchange Rate in the Small Open Island of Mauritius

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Abstract

This paper investigates the factors of real exchange rate (RER) in Mauritius by implementing a dynamic regression approach on quarterly data from 1999:Q1 to 2016: Q4. Productivity differential, interest rate differential, openness, gross domestic fixed capital formation and share price index are the main triggers of RER in the long-run. In the short-run, productivity differential and interest rate differential drive real exchange rate. Thus, RER will converge to its long-run equilibrium level if these factors are allowed to adjust freely.

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

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No ethics committee approval was required for this article type.

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How to Cite This Article

Ashok Babubudjnauth. 2021. \u201cDrivers of Real Exchange Rate in the Small Open Island of Mauritius\u201d. Global Journal of Human-Social Science - E: Economics GJHSS-E Volume 21 (GJHSS Volume 21 Issue E2): .

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GJHSS Volume 21 Issue E2
Pg. 19- 31

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Crossref Journal DOI 10.17406/GJHSS

Print ISSN 0975-587X

e-ISSN 2249-460X

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GJHSS-E Classification: FOR Code: 149999

Submission ReceivedApril 14, 2021
Peer Review Double Blind
Handling Editor
Accepted April 30, 2021
Published May 15, 2021

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v1.2

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May 11, 2021

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