JOURNAL ARTICLE
Cite JOURNAL ARTICLE
Style
Format
A Monetary (Asset) Approach to Exchange Rate Determination: The Evidence since 1973
Credit and Capital Markets – Kredit und Kapital, Vol. 14 (1981), Iss. 3 : pp. 341–349
Additional Information
Article Details
Baade, Robert A.
References
-
Cagan, Phillip (1956). “The Monetary Dynamics of Hyperinflation.” In: Milton Friedman (ed.) Studies in the Quantity Theory of Money. Chicago: University of Chicago Press.
Google Scholar -
Frenkel, Jacob A. (1976). “A Monetary Approach to the Exchange Rate: Doctrinal Aspects and Empirical Evidence.” Scandinavian Journal of Economics, vol. 78, No. 2 (May 1976).
Google Scholar -
International Monetary Fund. International Financial Statistics. Washington, D.C. XXVI, 1; XXVII, 1; XXVIII, 1; XXIX, 1; XXX, 1; XXXI 1; XXXII, 1 and 10.
Google Scholar -
Officer, Lawrence H. “The Purchasing-Power-Parity Theory of Exchange Rates: A Review Article.” International Monetary Fund Staff Papers. XXIII, No. 1 (March 1976).
Google Scholar
Abstract
A Monetary (Asset) Approach to Exchange Rate Determination: The Evidence Since 1973
Virtually every economist agrees that monetary factors affect the dollar price of world currencies. No such unanimity of opinion exists, however, when the question of degree is entertained. The adoption of a freer-floating exchange rate regime in 1973, however, provides an opportunity to analyze the degree to which monetary events influence dollar currency prices. While evidence gathered for the 1973 - 79 period does not confirm unequivocally a monetary or asset approach to exchange rate determination, it does suggest an important monetary role. Furthermore, the 1977-79 period offers more support for the asset approach than the 1973 - 76 period. This may reflect the fact that the world monetary system has settled back into a pattern after disruptions due to the significant oil price hikes in 1973-74 and after the commitment was made to a freer-floating exchange rate system in 1973.