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The Determination of the Equilibrium Exchange Rates Based on a General Equilibrium Model

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  • Li, Wu

Abstract

In this paper, a general equilibrium model is developed to analyze the determination of the equilibrium exchange rates. The model can deal with multiple types of moneys and moneys are integrated into the model through demand functions. When the endowments, preferences, production technologies and interest rates are given, the equilibrium exchange rates, equilibrium prices, equilibrium outputs and equilibrium utility levels can be computed by the model. A numerical example of a two-country economy is also presented to illustrate the model.

Suggested Citation

  • Li, Wu, 2015. "The Determination of the Equilibrium Exchange Rates Based on a General Equilibrium Model," MPRA Paper 68528, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:68528
    as

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    File URL: https://mpra.ub.uni-muenchen.de/68528/1/MPRA_paper_68528.pdf
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    References listed on IDEAS

    as
    1. Frenkel, Jacob A, 1976. " A Monetary Approach to the Exchange Rate: Doctrinal Aspects and Empirical Evidence," Scandinavian Journal of Economics, Wiley Blackwell, vol. 78(2), pages 200-224.
    2. Christian Bidard, 2004. "Prices, Reproduction, Scarcity," Post-Print hal-03094334, HAL.
    3. Stockman, Alan C, 1980. "A Theory of Exchange Rate Determination," Journal of Political Economy, University of Chicago Press, vol. 88(4), pages 673-698, August.
    4. Starr,Ross M., 2011. "General Equilibrium Theory," Cambridge Books, Cambridge University Press, number 9780521533867.
    5. Starr,Ross M., 2011. "General Equilibrium Theory," Cambridge Books, Cambridge University Press, number 9780521826457.
    6. Bidard,Christian, 2011. "Prices, Reproduction, Scarcity," Cambridge Books, Cambridge University Press, number 9780521180191.
    7. J. v. Neumann, 1945. "A Model of General Economic Equilibrium," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 13(1), pages 1-9.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    exchange rate; general equilibrium; multi-country economy; CGE model;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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