9780521034234

Exchange Rate Volatility, Trade, and Capital Flows Under Alternative Exchange Rate Regimes

by
  • ISBN13:

    9780521034234

  • ISBN10:

    052103423X

  • Format: Paperback
  • Copyright: 2006-12-14
  • Publisher: Cambridge University Press
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Summary

Recent years have seen a substantial increase in the volatility of exchange rates. This trend has prompted economists and finance analysts to question if the observed behaviour of exchange rates is consistent with a rational model. Does that volatility hinder trade? What are financial markets' effects on countries' investment decisions, and how would changes in fixed exchange rates affect growth and welfare? What are the requirements to make such changes feasible? Professors Sercu and Uppal examine these issues in the context of dynamic general equilibrium models, explicitly considering the role of financial markets while allowing for commodity markets to be segmented across countries. They show that the theoretical models for exchange rates in this context are quite different from those put forth by monetary theorists and proponents of purchasing power parity arguments.

Table of Contents

Acknowledgements
Guide to notation
Introduction and overview
Modeling exchange rates: a survey of the literature
A simple general-equilibrium model of an international economy
The spot exchange rate in a large class of general-equilibrium models
Forward exchange rates in a model with segmented goods markets
International trade flows, exchange rate volatility, and welfare
International capital flows and welfare
Tariff policy with international financial markets
Endogenous monetary policy and the choice of exchange rate regime
Concluding thoughts
References
Index
Table of Contents provided by Publisher. All Rights Reserved.

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