Motivated by growing evidence of nonlinear mean-reverting behavior in real exchange rates, this paper investigates the underlying dynamics in the context of a threshold vector error correction model (TVECM) of nominal exchange rate and relative prices. Unlike univariate models, our nonlinear...

This volume addresses profound issues in international economics, with contributions from leading researchers on the implications of trade. Empirical studies address preferential trading arrangements, global imbalances and exchange rates, facilitating an understanding of how the economy...