Exchange Rate Economics

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Cambridge University Press, 28 sept 1995 - 275 páginas
This book describes and evaluates the literature on exchange rate economics. It provides a wide-ranging survey, with background on the history of international monetary regimes and the institutional characteristics of foreign exchange markets, an overview of the development of conceptual and empirical models of exchange rate behavior, and perspectives on the key issues that policymakers confront in deciding whether, and how, to try to stabilize exchange rates. The treatment of most topics is reasonably compact, with extensive references to the literature for those desiring to pursue individual topics further. The level of exposition is relatively easy to comprehend; the historical and institutional material (part I) and the discussion of policy issues (part III) contain no equations or technical notation, while the chapters on models of exchange rate behavior (part II) are written at a level intelligible to first-year graduate students or advanced undergraduates. The book will enlighten both students and policymakers, and should also serve as a valuable reference for many research economists.
 

Índice

Introduction
1
Shortterm variability of keycurrency exchange rates 1957 94 percentage change from previous month
2
Keycurrency exchange rates 197494 January 1974100
2
Foreign exchange markets and the marketability of money
2
What makes money marketable?
2
Restrictions on the convertibility of money
14
The modern foreign exchange market
15
Exchange rate determination the myopic perspective
21
Concluding perspectives
115
News revisions in expectations and exchange rate dynamics
117
A continuoustime monetary model with sticky prices
118
The Dornbusch model of overshooting
123
A discretetime framework
124
The concept of longrun equilibrium and the role of the current
127
The target zone framework
128
Empirical estimates of structural exchange rate models
132

Exchange rate arrangements and international monetary regimes
24
Alternative exchange rate arrangements
25
Shortterm variability of selected exchange rates March 1979December 1994 percentage change from previous month
27
Selected exchange rates March 1979December 1994 March 1979 100
29
The international gold standard regime 18801914
30
The wartime and interwar regimes
36
The Bretton Woods system 194671
44
Exchange rates and national price levels
57
The purchasing power parity hypothesis
58
Arguments against PPP
60
Direct evidence
63
Real exchange rates 1970941970100
64
Variability of nominal and real exchange rates 195794 percentage change from previous quarter
68
Implications for macroeconomic doctrine
69
Normative applications of PPP
70
Concluding perspectives
71
Exchange rates and interest rates
74
The interest rate parity hypothesis
75
Empirical evidence on covered interest parity
78
Interest differentials as predictors of exchange rate changes
80
Possible explanations of prediction bias
83
Inferences from survey data
87
Concluding perspectives
88
Exchange rates and the balance of payments
90
Early models of the current account
91
The elasticities approach
93
Early models of stabilization policy for the open economy
96
The Swan diagram
97
The Mundell diagram
99
Asset equilibrium models of the balance of payments
102
The portfoliobalance framework
113
Reducedform specifications
133
Outofsample prediction accuracy
137
Empirical evidence on portfoliobalance models and the effectiveness of sterilized intervention
140
Largescale macroeconometric models
144
New perspectives from optimizing models of realignments under fixed exchange rates
148
The conceptual framework an example
152
Analysis of the example
157
Concluding perspectives
163
Appendix
166
New directions for conceptual models of flexible exchange rates
168
Models with irrationality or limited information
179
Concluding perspectives
182
The choice of exchange rate arrangements
187
Fixed versus flexible rates perspectives around 1960
189
Relevant structural characteristics
191
Other considerations
195
The evolution of European exchange arrangements
200
Inflation convergence and exchange rate stability for the original ERM members 197994
203
The nature of speculative capital flows perspectives today
205
Concluding perspectives
212
Policyoriented perspectives on exchange rate stability
216
The role of fiscal and monetary discipline
217
The pros and cons of capital controls
218
The capital inflows problem
223
The scope for international policy cooperation
227
Concluding perspectives
233
References
237
Index of authors
267
Index of subjects
272
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