Market Models and Applications

M. Rusydi and Sardar M. N. Islam
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M. Rusydi: Deakin University
Sardar M. N. Islam: Victoria University

Chapter 4 in Quantitative Exchange Rate Economics in Developing Countries, 2007, pp 45-62 from Palgrave Macmillan

Abstract: Abstract The exchange rate is a vital relative price in the financial market. In an open economy, monetary transmission operates through exchange-rate effects on the balance of payments and interest rates that affect financial and investment portfolios. The exchange rate policy in Indonesia, jointly with other financial policies, can be used to eradicate distortions in the domestic economy and help protect international competitiveness. To formulate appropriate exchange rate policies, an understanding of the foreign exchange market and its behavior is essential.

Keywords: Exchange Rate; Interest Rate; Real Exchange Rate; Unit Root Test; Money Supply (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1057/9780230592483_4

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