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Oil Prices and Real Exchange Rates in Oil-Exporting Countries: A Bounds Testing Approach

Jahan-Parvar, Mohammad R. and Mohammadi, Hassan (2008): Oil Prices and Real Exchange Rates in Oil-Exporting Countries: A Bounds Testing Approach. Forthcoming in: Journal of Developing Areas , Vol. 1, No. 44 (2010)

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Abstract

We test the validity of the Dutch disease hypothesis by examining the relationship between real oil prices and real exchange rates in a sample of fourteen oil exporting countries. Autoregressive distributed lag (ARDL) bounds tests of cointegration support the existence of a stable relationship between real exchange rates and real oil prices in all countries, suggesting a strong support for the Dutch disease hypothesis.

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