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Fundamental Determinants of Exchange Rates
Jerome L. Stein and Polly Reynolds Allen
272 pages
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23 figures, 28 tables
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216x138mm
978-0-19-829306-4
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Paperback
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30 April 1998
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This item is printed to order. Items which are printed to order are normally despatched and charged within 5-10 days.
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- A new approach to modelling exchange rates
- Applicable to large and small economies: this book covers the USA, G10, Latin America, Australia, France and Germany
- Theory supported by empirical evidence
Existing models fail to explain the large fluctuations in the real exchange rates of most currencies over the past twenty years. The Natural Real Exchange Rate approach (NATREX) taken here offers an alternative paradigm to those which focus on short-run movements of nominal eschange rates, purchasing power parity of the representative agent intertemporal optimization models. Yet it is also neo-classical in its stress upon the accepted fundamentals driving a real economy. It concentrates on the real exchange rate, and explains medium- tolong-run movements in equilibrium real exchange rates in terms of fundamental variables: the productivity of capital and social (public plus
private) thrift at home and abroad. The NATREX approach is a family of growth models, each tailored to the characteristics of the countries considered. The authors explain the real international value of the US dollar relativ to the G10 countries, and the US current account. These are two large economies. The model is also applied to small economies, where it explains the real value of the Australian dollar and the Latin American currencies relative to the US dollar. The model is relevant for developing countries where the foreign debt is a concern. Finally, it is applied to two medium-sized economies to explain the bilateral exchange rate between the French franc and the Deutsche Mark.
The authors demonstrate both the promise of the NATREX model and its
applicability to economies large and small. Alongside the analysis, econometrics, and technical details of these case studies, the introductory chapter explains in accessible terms the rationale behind the approach. The mix of theory and empirical evidence makes this book relevant to academics and advanced graduate students, and to central banks, ministries of finance, and those concerned with the foreign debt of developing countries.Readership: Academics and advanced graduate students. Professionals concerned with exchange rates and foreign debt, including bankers, financiers, international economists, and commentators, politicians.
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Jerome L. Stein, Eastman Professor of Political Economy, Brown University, USA, and Polly Reynolds Allen, Professor of Economics, University of Connecticut
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"This book greatly enhances our understanding of the behaviour of real exchange rates." - Peter Clark of the JMF "Stein and associates have reopened a promising field of research." - J. Niehaus
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1: Allen: The Economic and Policy Implications of the Natural Real Exchange Rate (NATREX) Models
2: Stein: The Natural Real Exchange Rate of the United States Dollar, and Determinants of Capital Flows
3: Lim and Stein: The Dynamics of the Real Exchange Rate and Foreign Debt in a Small Open Economy: The Case of Australia
4: Crouhy-Veyrac and Saint Marc: The Natural Real Exchange Rate between the French Franc and the Deutsche Mark: Implications for Monetary Union
5: Connolly and Devereux: The Equilibrium Real Exchange Rate: Theory and Evidence for Latin America
Stein: Appendix: International Finance Theory and Empirical Reality
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The specification in this catalogue, including without limitation price, format, extent, number of illustrations, and month of publication, was as accurate as possible at the time the catalogue was compiled. Occasionally, due to the nature of some contractual restrictions, we are unable to ship a specific product to a particular territory. Jacket images are provisional and liable to change before publication.
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