This paper tests the role of speculation in determining eleven CIS exchange rates over the period 1995m1-2010:5. This is done by reformulating the ex ante PPP relationship in such a way as to express all variables in levels rather than in first difference showing that, in efficient markets with...

Arguments are put forward to challenge the case for a trade war between the U.S. and China. The threat of a trade war against China is based on three pillars: (i) the Chinese currency is undervalued, (ii) undervaluation of the yuan is the cause of and cure for the U.S. massive trade deficit, and...

Focusing on the 1992-93 crisis of the European Monetary System (Ems), I stress, in opposition with the conclusions reached by “escape clause” models, the role played by the availability of foreign reserves. In particular, I show the lack of credibility of the Bundesbank’s commitment to...

This study empirically investigates the role of trade policy along with physical capital, human capital and labour force on economic growth in an isolated economy (i.e. North Cyprus). We use a sample of quarterly and seasonally adjusted data covering the period 1978Q1-2002Q4 to evaluate whether...

A model relating changes in the exchange rate to the activities of fundamentalists and technicians is specified and estimated. The results show that both types of traders play a role in exchange rate determination and that fundamentalists play a bigger role. The results of model selection tests...

Currency volatility is likely to rise in the immediate future due to the confluence of two new phenomena. First, the euro will be a strong alternative to the dollar as a global money; the bipolar international monetary system will be marked by a massive portfolio diversification in favor of...

A microeconomic view of exchange rate determination is used to explain exchange rate behaviour, particularly volatility. The pitfalls of trying to represent the exchange rate determination process by a simple model are exposed. It is shown that fundamentals are important for, and relevant to,...

In this paper it is demonstrated that the operational hedging techniques of risk sharing and currency collars can be as effective as forward hedging in reducing transaction exposure to foreign exchange risk. For this purpose we use historical data on the exchange rates of the Kuwaiti dinar...

This research re-examines the desirability of central bank interventions in foreign exchange to reduce spot exchange rate volatility. A small open-economy macroeconomic model is developed to incorporate both macroeconomic fundamentals and micro-structural features of foreign exchange markets....

This paper tests for equity market integration between Sweden and EU countries represented by Germany and France. A new causality test method developed by Hacker and Hatemi-J (2006) is applied. This method performs better than the other methods because it is robust to non-normality and the...