Exchange-rates - real and monetary factors
Citation:
Dd Purvis, 'Exchange-rates - real and monetary factors', Economic and Social Research Institute, Economic and Social Review, Vol.13 (Issue 4), 1982, 1982, pp303-314Download Item:
Abstract:
Precis: In this paper we explore several alternative models of the exchange rate which highlight the role played by real and monetary factors in exchange rate determination, and the short-and long-run effects of exchange rate changes on real output. In the first model, attention is focused on the role of purchasing power parity (PPP) with flexible prices and a variable real exchange rate. The second model introduces sticky prices and replaces PPP with interest rate parity as the key short-run link to the international economy. The third model introduces a multi-sector production structure and explores the implications of Marshallian dynamics whereby capital stocks adjust only slowly. Finally, some conclusions about the role of stabilisation policy are offered.
Author: Purvis, Dd
Publisher:
Economic & Social StudiesType of material:
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Series/Report no:
Economic and Social ReviewVol.13 (Issue 4), 1982