Political Risk, National Defense and the Dollar
AbstractThe Federal Reserve Board's trade-weighted real exchange rate index is highly correlated with the U.S. defense budget share of GNP. This paper provides evidence that the correlation is not spurious. Po litical risk associated with holding wealth in the United States vari es inversely with U.S. military security and, due to the Soviet milit ary threat to the West, is a major argument in foreign asset demand f unctions. Copyright 1988 by Oxford University Press.
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Bibliographic InfoArticle provided by Western Economic Association International in its journal Economic Inquiry.
Volume (Year): 26 (1988)
Issue (Month): 2 (April)
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- S. Brock Blomberg & Gregory D. Hess, 1996.
"Politics and exchange rate forecasts,"
Research Working Paper
96-02, Federal Reserve Bank of Kansas City.
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