ENGLISH

Fundamental determinants of exchange rates

By Jerome L. Stein , Polly Reynolds Allen , Associates

Book information

Publisher
OUP
Year
1995
ISBN
9780198287995, 0198287992
LCC
HG3851 .F86 1995
Open Library ID
OL7399071M
Language
english
Format
PDF
Filesize
3 MB (2875492 bytes)
Pages
273\273
Topic
Economy
Library
Kolxo3
Time added
2010-07-29 05:14:56

Description

This book greatly enhances our understanding of the behavior of real exchange rates. It provides an elegant model based on a solid theoretical foundation that links real exchange rates to their fundamental economic determinants and takes proper account of stock and flow considerations. The authors provide a masterful account of how changes in productivity and thrift affect the real exchange rate, and show that the long-run impact depends crucially on whether the change reflects the former fundamental (investment) or the latter (consumption). The empirical implementation uses state-of-the-art cointegration and error correction methodologies that are eminently well suited to capture the short-run adjustment of the real exchange rate to its medium- to long-run equilibrium value. The empirical results are extremely encouraging, as the economic fundamentals identified by the authors can explain a subbstantial part of the movement in the real exchange rate of a number of countries.--Peter Clark, International Monetary Fund

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