Exchange Rate Economics: A Survey

Mark Taylor and Ronald MacDonald

No 1991/062, IMF Working Papers from International Monetary Fund

Abstract: We survey the literature on the two main views of exchange rate determination that have evolved since the early 1970s: the monetary approach to the exchange rate (in flex-price, sticky-price and real interest differential formulations) and the portfolio balance approach. We then go on to discuss the extant empirical evidence on these models and conclude by discussing how the future research strategy in the area of exchange rate determination is likely to develop. We also discuss the literature on foreign exchange market efficiency, on exchange rates and ‘news’ and on international parity conditions.

Keywords: WP; rate of exchange; U.S. dollar; random walk; risk premium; forward rate; price level; risk neutrality; time series; expectations agent; exchange rate Economics; mark-dollar exchange rate; nominal rate; portfolio balance equation; Canadian dollar; nominal exchange rate; Exchange rates; Purchasing power parity; Currencies; Interest rate parity; Exchange rate modelling (search for similar items in EconPapers)
Pages: 61
Date: 1991-06-01
References: Add references at CitEc
Citations: View citations in EconPapers (58)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=940 (application/pdf)

Related works:
Journal Article: Exchange Rate Economics: A Survey (1992)
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:imf:imfwpa:1991/062

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().