The Behavior of the Real Exchange Rate Under Fixed and Floating Exchange Rate Regimes

Selahattin Dibooglu and Faik Koray ()

Open Economies Review, 2001, vol. 12, issue 2, pages 123-143

Abstract: This article investigates the behavior of real exchange rates under fixed and flexible exchange rates. Using data from both the Bretton Woods and the modern floating periods, we decompose real exchange rate movements into components attributable to supply shocks, real demand shocks, monetary shocks, capital flows shocks, and real oil price shocks. Empirical results show that real demand shocks are an important source of real exchange rate movements under both fixed and flexible rates, while monetary shocks are negligible. Supply and oil price shocks seem to be more important under Bretton Woods, while capital flows shocks seem to explain a relatively higher proportion of real exchange rate movements under the modern floating period. Copyright Kluwer Academic Publishers 2001

Keywords: real exchange rates; exchange rate systems (search for similar items in EconPapers)
View list of references

Downloads: (external link)
http://hdl.handle.net/10.1023/A:1008394128869 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this article

More articles in Open Economies Review from Springer
Series data maintained by Christopher F. Baum ().