In this paper we investigate the statistical relation between the U.S. budget deficits and the value of the dollar using cointegration and error-correction techniques. When quarterly data are used over the period 1971-1990, we find no evidence of cointegration. However, when we incorporate 1985...

Previous research that investigated the relation between U.S. trade flows and the value of the dollar either employed trade data between the United States and the rest of the world or between the United States and her major trading partners. In this paper we use monthly import and export data...

Purpose – Since the last review article by McKenzie, the literature has experienced a surge in the number of empirical articles. These new contributions, coupled with those that were overlooked by McKenzie, set the stage for this review. Many of the recent studies have been empirical in nature...

In this paper, we test Purchasing Power Parity (PPP) by applying a new unit root test that allows for nonlinearity in the data to the real exchange rates, constructed with a century of data of 20 countries from Taylor (2002). The problem of lag selection has been taken into account in testing as...