Influences of demand shocks on exchange rate volatility: imperfect capital mobility and substitutability
Article Abstract:
Imperfect capital mobility and asset substitutability determine a lower and upper limit of exchange rate movement, as shown by a numerical simulation model. Overshooting of exchange rate increases if money demand is relatively high interest responsive. The effect of demand shocks, thus, is similar to monetary shocks on exchange rate overshooting. The results imply that at the level of policy making such effects of different exogenous shocks should be studied to reduce undesirable effects. Monetary and fiscal policy could interact for a stable exchange rate.
Publication Name: The Manchester School of Economic and Social Studies
Subject: Social sciences
ISSN: 0025-2034
Year: 1996
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On the exchange rate of the dollar: market fundamentals versus speculative bubbles
Article Abstract:
No speculative bubbles appeared during the 1981-85 appreciation of the dollar against the pound and the mark. Some scholars have argued that such bubbles account for volatile variability in exchange rates, while others have countered that unexplained changes simply indicate omitted variables. The null no-bubbles hypothesis is rejected when misspecification factors are ignored, but when these factors are considered the transversality condition is proven valid; market fundamentals do explain the behavior of exchange rates.
Publication Name: The Manchester School of Economic and Social Studies
Subject: Social sciences
ISSN: 0025-2034
Year: 1993
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Speculative efficiency on the London metal exchange
Article Abstract:
A study conducted on whether trading in the London Metal Exchange (LME) is in harmony with the long-run speculative hypothesis indicates that the data can be considered valid for four of the six base metals for which the LME predicts prices. The LME is a center for base metal trading that gives daily information about base metals such as aluminium, lead, copper, zinc, nickel and tin.
Publication Name: The Manchester School of Economic and Social Studies
Subject: Social sciences
ISSN: 0025-2034
Year: 1995
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