IDEAS home Printed from https://ideas.repec.org/a/pal/imfstp/v39y1992i3p696-705.html
   My bibliography  Save this article

The Causes of Real Exchange Rate Variability: A Heretic View from the Interwar Period

Author

Listed:
  • Anne-Marie Gulde

    (International Monetary Fund)

  • Holger C. Wolf

    (International Monetary Fund)

Abstract

Historically, real exchange rate variability has been higher under flexible than under fixed exchange rates. Two explanations have been put forward. The neo-Keynesian view focuses on the interaction of volatile nominal exchange rates with sticky prices. The neoclassical approach maintains the flexible price assumption and regards an increased incidence of real shocks as the culprit. Using spectral decomposition, we examine the evidence on sticky prices for the interwar period. Prices and exchange rates are found to be equally flexible, contrary to the sticky price view and consistent with the instantaneous equilibrium approach.

Suggested Citation

  • Anne-Marie Gulde & Holger C. Wolf, 1992. "The Causes of Real Exchange Rate Variability: A Heretic View from the Interwar Period," IMF Staff Papers, Palgrave Macmillan, vol. 39(3), pages 696-705, September.
    • Handle: RePEc:pal:imfstp:v:39:y:1992:i:3:p:696-705
    as

    Download full text from publisher

    File URL: http://www.jstor.org/stable/3867477?origin=pubexport
    File Function: main text
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:imfstp:v:39:y:1992:i:3:p:696-705. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.