Nominal exchange rate regimes and the real exchange rate

This paper presents evidence that indicates that the random walk behavior of the real exchange rate is only a characteristic of the post-World War II period

Vittorio Grilli

2002

Key concepts

Scholarcy highlights

  • Two assumptions about the real exchange rate are common in the literature on international finance: the real exchange rate is a random walk, the time series properties of the real exchange rate depend on the nominal exchange rate regime
  • This paper presents evidence that indicates that the random walk behavior of the real exchange rate is only a characteristic of the post-World War II period
  • Our findings suggest that what is crucial to the real exchange rate behavior is the particular historical period rather than the nominal exchange rate arrangement

Need more features? Save interactive summary cards to your Scholarcy Library.