Topic
Exchange rate
About: Exchange rate is a research topic. Over the lifetime, 47255 publications have been published within this topic receiving 944563 citations. The topic is also known as: foreign-exchange rate & forex rate.
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TL;DR: In this paper, the relevance of the Balassa-Samuelson effect for the transition economies since 1990 is discussed, and the further implications of this are discussed especially in regard to EMU targets for exchange rate stability and inflation.
Abstract: This paper discusses the relevance of the Balassa-Samuelson effect for the transition economies since 1990. Their experience is consistent with this hypothesis and the further implications of this are discussed especially in regard to EMU targets for exchange rate stability and inflation.
237 citations
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TL;DR: The authors reviewed developments in the theory of international monetary economics from the late 1960's through the early 1980's and reviewed the more modern analysis of the dynamics of balance of payments adjustment under fixed exchange rates and of exchange rate determination under flexible exchange rates.
Abstract: This paper, written as a chapter for a Handbook of International Economics, reviews developments in the theory of international monetary economics from the late 1960's through the early 1980's. Following a review of the operation of the monetary mechanism of balance of payments adjustment in the context of the Mundell-Fleming model, the paper reviews the more modern analysis of the dynamics of balance of payments adjustment under fixed exchange rates and of exchange rate determination under flexible exchange rates. Beginning with a simple exposition of the monetary mechanism, the model is then extended to incorporate sluggish wage and output adjustments, endogenous monetary policy and sterilization operations, multiplicity of tradable and nontradable goods, large countries, capital mobility and portfolio balance. The review then turns to an exposition of exchange rate theory, starting with the monetary approach to exchange rate determination. Issues discussed in this context include purchasing power parities, nontraded goods, the real exchange rate, currency substitution and the interaction between real and monetary factors in effecting exchange rates.The paper proceeds with a presentation of a more general framework that views the question of exchange rate determination as part of the general theory of the determination of asset prices, and which highlights the unique role of expectations. The general framework is then applied to characterize the interaction between the balance of payments and the equilibrium real exchange rate.The paper concludes with a brief discussion of some empirical issues of exchange rate analysis.
237 citations
TL;DR: In this article, a model of a new kind is presented, which includes a determinant from the field of micro-structure?order flow, which is the proximate determinant of price in all microstructure models.
Abstract: Macroeconomic models of nominal exchange rates perform poorly. The propor-tion of monthly exchange rate changes that these models can explain is essen-tially zero. This paper presents a model of a new kind. Instead of relying exclu-sively on macroeconomic determinants, the model includes a determinant from the field of microstructure?order flow. Order flow is the proximate determinant of price in all microstructure models. This is a radically different approach to ex-change rate determination. It is also strikingly successful in accounting for real-ized rates. Our model of daily changes in log exchange rates produces R 2 statis-tics above 60 percent. For the DM/$ spot market, we find that $1 billion of net dollar purchases increases the DM price of a dollar by about 0.5 percent.
237 citations
TL;DR: A survey of practitioners in the interbank foreign exchange markets in Hong Kong, Tokyo, and Singapore was conducted by as mentioned in this paper, who found that liquidity and market uncertainty are two important reasons for deviating from the conventional interbank bid-ask spread.
236 citations
TL;DR: In this paper, the authors investigated to what extent the oil price shock and three other types of underlying macroeconomic shocks impact the trend movements of China's real exchange rate, and found that real oil price shocks would lead to a minor appreciation of the long-term real currency due to China's lesser dependence on imported oil than its trading partners.
236 citations