Bergman, Michael; Cheung, Yin-Wong; Lai, Kon S. - Økonomisk Institut, Københavns Universitet - 2005
This study explores the sources of real exchange rate fluctuations under the current float. Using a cointegration model … of the real exchange rate, the innovations are decomposed into transitory and common-trend components. Both transitory … and common-trend innovations are found to explain an appreciable portion of real exchange rate fluctuations, albeit their …