The Causes of Real Exchange Rate Variability: A Heretic View from the Interwar Period

Anne-Marie Gulde and Holger C. Wolf
Additional contact information
Anne-Marie Gulde: International Monetary Fund
Holger C. Wolf: International Monetary Fund

IMF Staff Papers, 1992, vol. 39, issue 3, 696-705

Abstract: Historically, real exchange rate variability has been higher under flexible than under fixed exchange rates. Two explanations have been put forward. The neo-Keynesian view focuses on the interaction of volatile nominal exchange rates with sticky prices. The neoclassical approach maintains the flexible price assumption and regards an increased incidence of real shocks as the culprit. Using spectral decomposition, we examine the evidence on sticky prices for the interwar period. Prices and exchange rates are found to be equally flexible, contrary to the sticky price view and consistent with the instantaneous equilibrium approach.

JEL-codes: E31 F33 N24 (search for similar items in EconPapers)
Date: 1992
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.jstor.org/stable/3867477?origin=pubexport main text (application/pdf)
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.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:imfstp:v:39:y:1992:i:3:p:696-705

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/41308/PS2

Access Statistics for this article

More articles in IMF Staff Papers from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().