Fundamental Determinants of Exchange Rates - Hardcover

Stein, Jerome L.; Allen, Polly Reynolds; Associates

9780198287995: Fundamental Determinants of Exchange Rates

Hardcover

ISBN 10: 0198287992 ISBN 13: 9780198287995

Publisher: Oxford University Press, 1996

"This book greatly enhances our understanding of the behavior of real exchange rates. It provides an elegant model based on a solid theoretical foundation that links real exchange rates to their fundamental economic determinants and takes proper account of stock and flow considerations. The authors provide a masterful account of how changes in productivity and thrift affect the real exchange rate, and show that the long-run impact depends crucially on whether the change reflects the former fundamental (investment) or the latter (consumption). The empirical implementation uses state-of-the-art cointegration and error correction methodologies that are eminently well suited to capture the short-run adjustment of the real exchange rate to its medium- to long-run equilibrium value. The empirical results are extremely encouraging, as the economic fundamentals identified by the authors can explain a subbstantial part of the movement in the real exchange rate of a number of countries."--Peter Clark, International Monetary Fund

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About the Author:

Jerome L. Stein is Professor of Economics and Eastman Professor of Political Economy emeritus at Brown University.

Review:

"The work of Jerome Stein and his colleagues in developing the NATREX model of the equilibrium exchange rate marks an important advance in a field that has been unreasonably neglected until recently."--John Williamson, Institute for International Economics

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