Essential hybridity: A money view of FX

Perry Mehrling

Journal of Comparative Economics, 2013, vol. 41, issue 2, 355-363

Abstract: Economics and finance typically analyze the exchange rate as the relative price of goods and assets, respectively. By contrast, this paper explores a “money view” which understands the exchange rate as the relative price of money, a price that is determined in dealer markets by the order flow facing profit-seeking dealers. The economics of the FX dealer are analyzed using an extension of Treynor’s model of security dealers; central banks are analyzed as FX dealers of last resort.

Keywords: F31; G20; Exchange rate; Dealer; Treynor model; Money view; Hierarchy of money (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:41:y:2013:i:2:p:355-363

DOI: 10.1016/j.jce.2013.03.007

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