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The Price of Gold and the Exchange Rates: Once Again

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  • Larry A. Sjaastad

    (UWA Business School, The University of Western Australia)

Abstract

This paper examines the theoretical and empirical relationships between the major exchange rates and the price of gold using forecast error data. Among other things, it is found that, since the dissolution of the Bretton Woods international monetary system, floating exchange rates among the major currencies have been a major source of price instability in the world gold market and, as the world gold market now seems to be dominated by the U.S. dollar bloc, appreciations or depreciations of that dollar would have strong effects on the price of gold in other currencies. The results of this study are rather different from those obtained in an earlier study of the same subject.

Suggested Citation

  • Larry A. Sjaastad, 2007. "The Price of Gold and the Exchange Rates: Once Again," Economics Discussion / Working Papers 07-20, The University of Western Australia, Department of Economics.
  • Handle: RePEc:uwa:wpaper:07-20
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    File URL: https://www.business.uwa.edu.au/school/disciplines/economics/?a=98660
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    References listed on IDEAS

    as
    1. Hansen, Lars Peter & Hodrick, Robert J, 1980. "Forward Exchange Rates as Optimal Predictors of Future Spot Rates: An Econometric Analysis," Journal of Political Economy, University of Chicago Press, vol. 88(5), pages 829-853, October.
    2. Dornbusch, Rudiger, 1987. "Exchange Rate Economics: 1986," Economic Journal, Royal Economic Society, vol. 97(385), pages 1-18, March.
    3. K.W. Clements & L.A. Sjaastad, 1983. "How Protection Taxes Exporters," Economics Discussion / Working Papers 83-15, The University of Western Australia, Department of Economics.
    Full references (including those not matched with items on IDEAS)

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