This paper focuses on the effect of import protection on the response of the real exchange rate to capital flows. The central hypothesis is that barriers to imports blunt the expenditure and production shifting effects of changes in relative prices, and hence the ability of the real exchange...

This paper examines the theoretical and empirical relationships between the major exchange rates and the price of gold using forecast error data. Among other things, it is found that, since the dissolution of the Bretton Woods international monetary system, floating exchange rates among the...

This paper investigates the properties of the purchasing-power-parity (PPP) real exchange rate as a proxy for the true real exchange rate, which is defined as the relative price of traded goods. It finds that the PPP real exchange rate is prone to measurement error and examines the nature of...