This paper examines the empirical relation between nominal exchange rates and macroeconomic fundamentals for five major OECD countries between 1974 and 1987. Five theoretical models of exchange rate determination are considered. Potential non-linearities are examined using a variety of...

This paper explores the relation between real exchange rates and real interest rate differentials for the United States, West Germany, Japan, and the United Kingdom. Contrary to theories based on the joint hypothesis that domestic prices are sticky and monetary dis turbances are predominant, the...

This Paper estimates the effect on international trade of three multilateral organizations intended to increase trade: 1) the World Trade Organization (WTO) and its predecessor the Generalized Agreement on Tariffs and Trade (GATT); 2) the International Monetary Fund (IMF); and 3) the...

This paper characterizes the integration patterns of international currency unions (such as the CFA Franc Zone). We empirically explore different features of currency unions, and compare them to countries with sovereign monies by examining the criteria for Mundell's concept of an optimum...

Both the literature and new empirical evidence show that exchange rate regimes differ primarily by the noisiness of the exchange rate, not by measurable macroeconomic fundamentals. This motivates a theoretical analysis of exchange rate regimes with noise traders. The presence of noise traders...

This Paper develops a simple new methodology to test for asset integration and applies it within and between American stock markets. Our technique is tightly based on a general intertemporal asset-pricing model, and relies on estimating and comparing expected risk-free rates across assets....