Over 2000 books to read online or download to your PC, Kindle, Android, iPad, iPhone and any electronic book reader
Find an eBook by title or author...

 Electronic books  Economics and Business  Basic financial concepts 

The determinants of the euro-dollar exchange rate
Jörg Clostermann - Bernd Schnatz
Published in 2000

At the beginning of 1999 the euro was launched as a common currency in 11 European countries. This paper addresses empirically the medium to long-term forces driving the real euro-dollar exchange rate. Constructing a synthetic euro-dollar exchange rate over a period from 1975 to 1998 and applying cointegration approaches, four factors are identified as fundamental determinants of the real euro-dollar exchange rate: the international real interest rate differential, relative prices in the traded and non-traded goods sectors, the real oil price and the relative fiscal position. A single equation error correction model outperforms multivariate models and seems to be best suited to analyse and forecast the behaviour of the euro-dollar exchange rate in the medium-term perspective. If this model is applied to the current developments in foreign exchange markets, the external value of the euro appears to be rather low in the winter of 1999/2000

eBook License: Copyrighted (Personal Use Only)

Free PDF eBook - 157 Kb - 34 pages