Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2005-02-23
Number: 05-024/2
Author-Name: Charles van Marrewijk
Author-Email: vanmarrewijk@few.eur.nl
Author-Workplace-Name: Faculty of Economics, Erasmus Universiteit Rotterdam
Title: Basic Exchange Rate Theories
Abstract: This four-chapter overview of basic exchange rate theories discusses (i) the elasticity and absorption approach, (ii) the (long-run) implications of the monetary approach, (iii) the short-run effects of monetary and fiscal policy under various economic conditions, and (iv) the transition from short-run to long-run in a sticky-price model with rational expectations. We provide ample anecdotal, historical, and heuristic information on the goodness-of-fit of the various exchange rate models based on simple graphs, statistics, and tests. Details are provided in technical notes.
Classification-JEL: E; F; G
Keywords: exchange rates; expectations; monetary approach; elasticity; absorption; overshooting; monetary policy; fiscal policy
File-Url: https://papers.tinbergen.nl/05024.pdf
File-Format: application/pdf
File-Size: 671544 bytes
Handle: RePEc:tin:wpaper:20050024