Black and official exchange rates in the Pacific Basin countries: an analysis of their long-run dynamics
- 1 April 1994
- journal article
- research article
- Published by Taylor & Francis in Applied Economics
- Vol. 26 (4) , 399-407
- https://doi.org/10.1080/00036849400000086
Abstract
This paper examines the long-run dynamic relationship between black and official markets for seven Pacific Basin countries over the period 1974 to 1989. The evidence shows a long-run unit proportionality between the two rates, i.e. a constant long-run black-market premium. When the premium deviates from its long-run value, the black-market rate adjusts to eliminates the division. The speed of adjustment varies and seems to depend on the financial development of the country. Finally, there is evidence of weak-form informational inefficiency in the black markets.Keywords
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