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Real Exchange Rates (EXCH) is the next variable that will be analysed in this VAR. The reason for including exchange rates in the VAR is that they are an important channel through which the price of oil may impact upon economic activity.Another reason is that the UK exports crude oil worldwide therefore it may be possible to analyse the effects on domestic exchange rates should there be a change in the price of oil. The real exchange rate data uses Jan 2005 = 100 as the base.
Q. Define Effective exchange rate? Suppose that we are interested in external competitiveness of a country, let's say Japan. To do this we could look at evolution of a particul
what do we mean when we say export are exogenous and import are endogeneos?
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Ask question difference between static multiplier and dyanamic multiplier
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