Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86438
Authors: 
van Marrewijk, Charles
Year of Publication: 
2005
Series/Report no.: 
Tinbergen Institute Discussion Paper 05-024/2
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.
Subjects: 
exchange rates
expectations
monetary approach
elasticity
absorption
overshooting
monetary policy
fiscal policy
JEL: 
E
F
G
Document Type: 
Working Paper

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