This paper incorporates international capital flows into a two-country, monetary-general-equilibrium model of asset prices with investment and production. We use the model to calculate theoretical covariances between investment, the current account, the exchange rate, and the terms of...

An econometric portfolio balance model of an open economy, incorporating exchange rate, price, and current account dynamics, is derived and estimated.The usual stability conditions do not guarantee a unique rational expectations solution, and several proposals for resolving this situation are...

This paper, written as a chapter for a Handbook of International Economics, reviews developments in the theory of international monetary economics from the late 1960's through the early 1980's. Following a review of the operation of the monetary mechanism of balance of payments adjustment in the...

This paper analyzes the behavior of the current account and the exchange rate in the British economy during the 1970's, and discusses the outlook, as influenced by the availability of oil revenues, for exchange rate developments during the 1980's.Both trade and exchange rate behavior are...

We examine whether the Chinese exchange rate is misaligned and how Chinese trade flows respond to the exchange rate and to economic activity. We find, first, that the Chinese currency, the renminbi (RMB), is substantially below the value predicted by estimates based upon a cross-country sample,...

This paper predicts ex-ante the probability of currency crises end size of expected devaluations month by month for Mexico between 1980 and 1986 using a heterodox linear discrete time model of exchange rate crises. The forces contributing to speculative attacks on the Mexican peso include...

This paper reviews the main developments in U.S. trade and the balance of payments from the first years of the 19th century to the first decade of the 20th. American export trade was dominated by agricultural and other resource products long after the majority of the labor force had shifted out...

Real exchange rates between the yen and dollar based on general price indexes overestimate the competitiveness of the United States relative to Japan. High productivity growth in the traded sector of the Japanese economy results in a continuous fall in the prices of traded goods relative to...

Undesirable real effects have been attributed to floating exchange rates in general, and the 1980-83 appreciation of the dollar in particular.In the appreciating country, the U.S., export industries lose competitiveness and so output falls. In the other country, say Europe, the exchange rate...

This paper assesses the quantitative effects of a shift to monetary restraint in the United States on the DM-$ exchange rate and the German economy. The results indicate that such effects are large. If Germany keeps its money growth unchanged, it will tend to experience a sharp and sustained...