Is the real dollar rate highly volatile?

Stefan Norrbin and Onsurang Pipatchaipoom ()
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Onsurang Pipatchaipoom: Samford University

Economics Bulletin, 2007, vol. 6, issue 2, 1-15

Abstract: This note s the real exchange rate behavior observed by Lothian (1998). Specifically, we investigate the volatility of the U.S. dollar relative to other major currencies using d data, and reestimate the real exchange rate using alternative currency baskets. The results confirm Lothian's suggestion that the dollar is highly volatile. However, other major currencies also have high volatility. In fact, the DM is surprisingly calm relative to most major currencies. Thus the use of the DM as a numeraire would be preferred to any other major currency.

JEL-codes: F2 F3 (search for similar items in EconPapers)
Date: 2007-02-10
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