The Economics of Exchange Rates

Inthelastfewdecadesexchangerateeconomicshasseenanumberofdevelopments,withsubstantialcontributionstoboththetheoryandempiricsofexchangeratedetermination.Importantdevelopmentsineconometricsandtheincreasinglylargeavailabilityofhigh-qualitydatahavealsobeenresponsibleforstimulatingthelargeamountofempiricalworkonexchangeratesinthisperiod.Nonetheless,whileourunderstandingofexchangerateshassignificantlyimproved,anumberofchallengesandopenquestionsremainintheexchangeratedebate,enhancedbyeventsincludingthelaunchoftheEuroandthelargenumberofrecentcurrencycrises.Thisvolumeprovidesaselectivecoverageoftheliteratureonexchangerates,focusingondevelopmentsfromwithinthelastfifteenyears.Clearexplanationsoftheoriesareoffered,alongsideanappraisaloftheliteratureandsuggestionsforfurtherresearchandanalysis.