A Structural Model of Exchange Rate Dynamics

Anton Kuzmin

MPRA Paper from University Library of Munich, Germany

Abstract: The concept of formation of the equilibrium exchange rate on the conversion market was developed, taking into account foreign trade, capital flows and other components of the balance of payments. As the main determinants of theoretical-structural model of the dynamics of the exchange rate equal countries are used, in the terms of trade, capital mobility, cumulative releases, internal and external prices. The result is a new final structural dependence of the dynamics of the exchange rate on the key macroeconomic determinants. The results obtained are applied to the study of the concept of purchasing power parity that allowed to justify theoretically - from positions of macroeconomic approach - a fundamental mismatch between the value of the exchange rates and the theory of purchasing power parity.

Keywords: exchange rate; modeling; balance of payments; trading conditions; purchasing power parity (search for similar items in EconPapers)
JEL-codes: C3 C38 C5 C62 C68 E4 E44 E47 E5 E52 F31 F32 F37 F41 (search for similar items in EconPapers)
Date: 1971-10-11
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Published in Review of Business and Economics Studies 3.2(2014): pp. 86- 92

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