Gu, Jingping; Li, Qi; Yang, Jian - In: Economics Letters 118 (2013) 2, pp. 300-303
The mean reversion of real exchange rates in G5 countries depends on both countries’ fiscal deficits/surplus in a nonlinear way. When the fiscal policy pushes the real exchange rate to be deviated further away from the equilibrium level, the mean reversion process is faster.
