''Coexistence of Sustained External Imbalance and Real Exchange Rate Misalignment: The Underlying Fundamentals''
( 2014, Vol. 34 No.3 )
By focusing on the macroeconomic effects of temporary price shocks, this note clarifies the relationships among the terms of trade, the real exchange rate and the current account. This clarification suggests that a real depreciation might prove incapable of bringing the external imbalance back to a sustainable level.