This paper assesses duration-specific treatment effects of fixed currency regimes on bilateral trade along a duration path of up to 25 years. We find that country-pairs with fixed exchange rate regimes trade more, but only after about 8 years.

This paper uses quantile regression techniques to investigate the temporal dependence patterns of major exchange rates around the globe. Specifically, we estimate quantile autoregressive models for daily exchange rate returns of the USD/EUR, USD/JPY, USD/GBP, USD/AUD, USD/CHF and USD/CAD...

This study re-evaluates the monetary approach for the Canada/U.S. exchange rate and shows that its basic structure can be verified although the coefficients are not consistently in line with theory. Our findings also indicate that exchange rate adjustment is subject to regime shifts.

We investigate the role of sticky wages in accounting for real exchange rate dynamics. Unlike the sticky price economy, government spending shocks play a more important role than technology shocks in explaining the hump-shaped impulse responses of real exchange rates.

Using a heterogeneous firm model with firm entry and endogenous markups, I study how the financial constraints of exporting firms affect exchange rate pass-through behaviors. I find that the financial constraints increase the degree of exchange rate pass-through.

Currency carry trades–buying high-deposit-rate currencies and selling low-deposit-rate currencies–earn positive excess returns over time. The literature has heretofore explained this phenomenon based on currency differences. We examine the possibility that the bank default risk of...

We study the rationality of the inflation forecasts of the central banks of Argentina, Brazil, Chile, and Mexico. We reject rationality under a symmetric (Chile is an exception) but not under an asymmetric loss function. An overprediction implies a larger loss than an underprediction. We also...

The mean reversion of real exchange rates in G5 countries depends on both countries’ fiscal deficits/surplus in a nonlinear way. When the fiscal policy pushes the real exchange rate to be deviated further away from the equilibrium level, the mean reversion process is faster.

We investigate the role of exchange rates in inflation-targeting emerging economies. We give strong evidence that hybrid inflation-targeting frameworks, where exchange rate is managed, deliver a stronger nominal anchor, as they show better resistance to the 2007–2008 inflation shock.

Central banks, wanting to devalue their currency, often intervene in the foreign exchange market by buying up foreign currency. Such interventions even if effective lead to a build up of foreign exchange reserves. This paper argues that the coupling of devaluation and reserve build up can be...