The paper develops a flow model of the exchange rate with speculative capital flows integrated in a rigorous manner. The model is consistent with five foreign exchange market puzzles: (1) occasional discontinuous jumps in the exchange rate; (2) periodic short-term regimes of persistent...

The paper develops a flow model of the exchange rate with speculative capital flows integrated in a rigorous manner. The model is consistent with five foreign exchange market puzzles: (1) occasional discontinuous jumps in the exchange rate; (2) periodic short-term regimes of persistent...

The paper develops a flow model of the exchange rate with speculative capital flows integrated in a rigorous manner. The model is consistent with five foreign exchange market puzzles: (1) occasional discontinuous jumps in the exchange rate; (2) periodic short-term regimes of persistent...

During the fifteen years since 1970, the theory of exchange-rate determination has been completely transformed. In the late 1960s, the standard model of the foreign exchange market had supply and demand as stable functions of exports and imports, with the expection that a floating rate would...

During the 1970s an extensive theoretical literature has developed analyzing market determination of freely floating exchange rates. At the same time, there has been extensive and continuous intervention in the market by central banks. Exchange rates have not been floating freely; they have been...

During the 1970s an extensive theoretical literature has developed analyzing market determination of freely floating exchange rates. At the same time, there has been extensive and continuous intervention in the market by central banks. Exchange rates have not been floating freely;they have been...

This paper presents and analyzes the data on the trends in United States international trade and investment since World War II. From this data we can perceive a shrinking United States fraction of manufacturing output and exports, a return to and strengthening of lines of comparative advantage,...

During the decade since 1973, the U.S. economy has become increasingly interdependent with the newly industrializing countries (NICs) among the developing countries. These countries have had high investment ratios to GNP, financed mainly by domestic saving, but also partly by foreign borrowing....

This paper integrates exchange-rate policy into a model of exchange- rate behavior, and examines the data econometrically to infer hypotheses about policy behavior in the 1970s. The model shows how unanticipated movements in money, the current account, and relative price levels will cause first...

This paper presents a model that integrates money, relative prices, and the current account balance as factors explaining movements in nominal (effective) exchange rates. Thus money and the current account are the proximate determinants of changes in real (effective) rates. The basic model is...