ABSTRACT

First published in 2007. Exchange Rate Economics: Theories and Evidence is the second edition of Floating Exchange Rates: Theories and Evidence, and builds on the successful content and structure of the previous edition, but has been comprehensively updated and expanded to include additional literature on the determination of both fixed and floating exchange rates. Core topics covered include: • the purchasing power parity hypothesis and the PPP puzzle; • the monetary and portfolio-balance approaches to exchange rates; • the new open economy macroeconomics approach to exchange rates; and • the determination of exchange rates in target zone models and speculative attack models. Exchange Rate Economics: Theories and Evidence also includes extensive discussion of recent econometric work on exchange rates with a particular focus on equilibrium exchange rates and measuring exchange rate misalignment, as well as discussion on the non-fundamentals-based approaches to exchange rate behaviour, such as the market microstructure approach. The book will appeal to academics and postgraduate students with an interest in all aspects of international finance and will also be of interest to practitioners concerned with issues relating to equilibrium exchange rates and the forecastability of currencies in terms of macroeconomic fundamentals.

chapter 1|38 pages

Introduction

Some basic concepts and stylised facts and the case for (and against) floating exchange rates

chapter 3|26 pages

The economics of the PPP puzzle

chapter 5|28 pages

The Sticky-Price Monetary Model

chapter 6|32 pages

The monetary approach to the exchange rate

An empirical perspective

chapter 8|28 pages

Real exchange rate determination

Theory and evidence

chapter 9|24 pages

Equilibrium exchange rates

Measurement and misalignment

chapter 11|15 pages

The new open economy macroeconomic model

Pricing to market and exchange rate volatility redux

chapter 12|24 pages

The economics of fixed exchange rates, part 1

Target zone models

chapter 13|26 pages

The economics of fixed exchange rates, part 2

Speculative attack models and contagion