This paper investigates the relationship between international capital liberalization and exchange rate volatility … theoretically unambiguous, the effects on the volatility of exchange rate can have either sign. On one hand, the liberalization …, while the increase in the number of traders in the longer run should make the market thicker and tend to reduce volatility …

This paper investigates the relationship between international capital liberalization and exchange rate volatility … theoretically unambiguous, the effects on the volatility of exchange rate can have either sign. On one hand, the liberalization …, while the increase in the number of traders in the longer run should make the market thicker and tend to reduce volatility …

volatility, whereas a low degree of pass-through stems from both nominal rigidities (in the form of local currency pricing) and … price discrimination. We model real exchange rate volatility in response to real shocks by reconsidering and extending two …