This paper addresses an interesting theoretical intuition, originally put forward in De Grauwe (1989), according to which market efficiency should find stronger support in a pegged exchange rate regime rather than in a purely floating context. To this purpose, we extend to a selected group of...

This study argues that the political considerations were an important factor behind the crisis of the Brazilian real in January 1999. The divided coalition government and a president facing impending elections eschewed the correction of external misalignments and the fiscal austerity at a time...

The paper seeks to analyze various contemporary theories in the measurement of real exchange rates and the associated problematics involved in each case particularly for a developing economy. It then focuses on the estimation of real exchange rate for the developing economy of Turkey using the...

After eight years of strong growth of output with stable prices, in 1999 Argentina entered a recession which culminated at the end of 2001 in a deep economic and social crisis. At first sight the crisis was brought about by the fixed exchange rate peso-dollar which had previously stopped...

Two propositions are verified about the exchange rate regime of a basket peg, which is adopted by some developing countries. The first is that by pegging the domestic currency to an import-weighted basket, the economy can be insulated from the imported inflation resulting purely from change in...

Two propositions are verified about the exchange rate regime of a basket peg, which is adopted by some developing countries. The first is that by pegging the domestic currency to an import-weighted basket, the economy can be insulated from the imported inflation resulting purely from change in...

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...

In a 1952 article Alexander argued that currency devaluation could lead to a decline in domestic consumption by redistributing income from workers with high MPC to producers with low MPC. In this paper we include the exchange rate as another determinant of domestic consumption in addition to...

Contrast to the BEER, PEER and FEER approaches, this paper develops a two-country model of monopolistic competition to re-examine whether the Chinese Renminbi is undervalued and to what extent it is undervalued. A testable equation that governs the equilibrium exchange rate of Renminbi is...

examines the volatility of the U$/Euro exchange rate during the period 1999-2005. According to our estimates, the degree of volatility persistence, although statistically significant, is rather low; moreover, there is no evidence of an asymmetric response of predictable volatility to past...