Using two examples we have shown that large fluctuations in real exchange rates cannot normally be attributed to "overshooting" in the Dornbusch sense. We proposed to use the interest differential between to countries as a direct and reliable measure of the extend of overshooting. Observing that...

To account for currency substitution, most studies today include exchange rate as a determinant of the demand for money, in addition to income and interest rate. This tradition goes back to Robert Mundell who introduced this notion in 1963. In this paper, we demonstrate that the failure to find...

Agriculture was the mainstay of the Nigerian economy prior to independence and immediately after. Agriculture however, has suffered persistent decline since the 1970s with the exchange rate policy being implicated in the misfortune of this sector. Earlier studies on the effect of exchange rate...

In this paper, we investigate Grangerfs causality among the exchange rate, Tobinfs marginal q, and investment-capital ratio with quarterly data on firms categorized small and medium-sized enterprises (SMEs) in Japan. We utilize the data of following industries: chemical, iron and steel,...

This article adopts the asymmetric DCC with one exogenous variable (ADCCX) model developed by Vargas (2008), by updating the concept of ‘volatility surprise’ to capture cross-market relationships. Current methods for measuring spillovers do not focus on volatility interactions, and neglect...

This paper estimates a forward-looking Taylor-type interest rate reaction function for Swedish central bank’s inflation-targeting policy and a developed model with the exchange rate taken into account. Based on real-time quarterly macroeconomic time-series from Sweden in the first decade...

We assess the behavior of real effective exchange rates (REERs) of members of the CEMAC zone with respect to their long-term equilibrium paths. A reduced form of the fundamental equilibrium exchange rate (FEER) model is estimated and associated misalignments are derived for the period 1980 to...

Controls on capital inflows have been experiencing a period akin to a renaissance since the beginning of the global financial crisis in 2008, with several prominent countries choosing to impose controls; e.g., Thailand, Korea, Peru, Indonesia, and Brazil. We focus on the case of Brazil, a...

We estimate the effect of exchange rate movements on firm-level wages, using a representative panel of manufacturing firms. We show that the direction and size of wage adjustment is shaped by the international exposure of each firm on both the sale and cost side of the balance sheet, similar to...

The most significant structural change undergone by the British and Swiss economies during the past 25 years (1975-2000) is indisputably the development of their financial systems. From this point of view, the two countries show a number of similarities: the presence of one or more international...