On the Determinants of exchange in Nicaragua

Abstract

This work presents an analysis of the factors that influenced the behavior of the real exchange rate. With data from the reports of the Central Bank of Nicaragua, taking the years 2001 to 2006 as a reference. The most important factors for the real exchange rate are the following: International prices, capital flows, real interest rate, taxes and domestic subsidies, Volume of public spending (fiscal deficit). The terms of trade for Nicaragua had a marked deterioration. Fiscal policy has been controlling the fiscal deficit. The international environment has not been favorable for Nicaragua