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The strong dollar-weak dollar debate and the vagaries of currency exchange rate regimes.
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We examine the effects of endogenously determined realignment expectations in a model of a target zone with sluggish price adjustment. We allow these expectations to be based on a policy rule that generates an increasing probability of realignment as output moves away from full employment. We...
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The impact of aggregate nominal and real shocks on the variance of relative prices is studied in the case of an open … first part of the paper it is shown that the limited information problem causes an excess variance of relative prices … second part of the paper compares fixed and flexible exchange rate regimes under a variance of relative prices criterion …
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During the 1980s, policy advisers were successful in promoting the view that movements in the value of the dollar have an inverse relationship to U.S. international competitiveness. This article explains their hypothesis, as well as the counterargument that exchange rates positively reflect a...
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For many years after the seminal work of the Meese and Rogoff (1983a), conventional wisdom held that exchange rates could not be forecast from monetary fundamentals. Monetary models of exchange rate determination were generally unable to beat even a naive no-change model in out-of-sample...
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