The real exchange rate of New Zealand and its major trading partners: A variance decomposition

Abstract

This paper examines the variability of New Zealand's real exchange rate with that of its partner countries. What is the level of this variability, what does this variability comprise of, how does this variability change as the defined time horizon changes, and what can be said, if anything, about the past and expected future trend of the real exchange rate? Furthermore, an explanation is given in this standing as to why this issue is important. Who gets affected by the results, why does it affect these groups, and what, if anything can be done about the consequences?