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Interrelation Between The Exchange Rate And The Interest Rate In Romania

Author

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  • Catalina Handoreanu

    (Academy of Economic Studies, Bucharest)

Abstract

Lately, the connection between the exchange rate and interest rate has once again caught the attention of the researchers. The volatility of the two macroeconomic indicators has an almost simultaneous effect on the inflation, real income, exports and imports, which influence the long-term development. This working paper analyses, besides the UIP hypothesis, the reverse relationship of the exchange rate on the interest rate as this paper sets out to determine the role of Romanian exchange rate on achieving macroeconomic stability.

Suggested Citation

  • Catalina Handoreanu, 2008. "Interrelation Between The Exchange Rate And The Interest Rate In Romania," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 12(12(517)(s), pages 90-97, December.
    • Handle: RePEc:agr:journl:v:12(517)(supplement):y:2008:i:12(517)(supplement):p:90-97
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    File URL: http://store.ectap.ro/suplimente/Finante_nov_2008_en.pdf
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    References listed on IDEAS

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    6. Meese, Richard A & Rogoff, Kenneth, 1988. " Was It Real? The Exchange Rate-Interest Differential Relation over the Modern Floating-Rate Period," Journal of Finance, American Finance Association, vol. 43(4), pages 933-948, September.
    7. Edison, Hali J. & Pauls, B. Dianne, 1993. "A re-assessment of the relationship between real exchange rates and real interest rates: 1974-1990," Journal of Monetary Economics, Elsevier, vol. 31(2), pages 165-187, April.
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    Cited by:

    1. Ghiba, Nicolae, 2010. "Impactul modificării ratei dobânzii asupra cursului de schimb în România [The impact of interest rates changes on the exchange rate in Romania]," MPRA Paper 28451, University Library of Munich, Germany, revised 27 Jan 2011.

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