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Exchange Rates and Interest Parity

In: Handbook of International Economics

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  • Engel, Charles

Abstract

This chapter surveys recent theoretical and empirical contributions on foreign exchange rate determination. The chapter first examines monetary models under uncovered interest parity and rational expectations, and then considers deviations from UIP/rational expectations: foreign exchange risk premium, private information, near-rational expectations, and peso problems.

Suggested Citation

  • Engel, Charles, 2014. "Exchange Rates and Interest Parity," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 453-522, Elsevier.
    • Handle: RePEc:eee:intchp:4-453
    DOI: 10.1016/B978-0-444-54314-1.00008-2
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    Keywords

    Exchange rates; Uncovered interest parity; Foreign exchange risk premium;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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