Exchange-Rate Determination

Giancarlo Gandolfo

Chapter 15 in International Finance and Open-Economy Macroeconomics, 2016, pp 333-384 from Springer

Abstract: Abstract The problem of the forces that determine the exchange rate and, in particular, its equilibrium value, is self-evident under flexible exchange rates, but is also important under limited flexibility and even under fixed exchange rates (if the fixed rate is not an equilibrium one, the market will put continuing pressure on it and compel the monetary authorities to intervene in the exchange market, etc.). This problem has already been mentioned in several places (see, e.g., Sects. 3.2.1 , 9.1, 13.4); in this chapter we gather up the threads and try to give a general treatment. This is not easy, since various competing theories exist, of which we shall try to give a balanced view. A section on chaos theory and the exchange rate concludes the chapter.

Keywords: Exchange Rate; Current Account; Real Exchange Rate; Monetary Authority; Foreign Asset (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/978-3-662-49862-0_15

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