EXCHANGE RATES AND RATIONAL EXPECTATIONS.
Item
-
Title
-
EXCHANGE RATES AND RATIONAL EXPECTATIONS.
-
Identifier
-
AAI8601661
-
identifier
-
8601661
-
Creator
-
KALLIANIOTIS, IOANNIS NIKOLAOS.
-
Contributor
-
Thom Thurston
-
Date
-
1985
-
Language
-
English
-
Publisher
-
City University of New York.
-
Subject
-
Economics, General
-
Abstract
-
This dissertation deals with the determinants of exchange rates and develops an asset view of exchange rate determination in the short-run where prices are adjusted gradually (GAP) and Purchasing Power Parity (PPP) does not hold. The role of expectations is emphasized in a model which incorporates the fundamental principles of the monetary approach to the balance of payments under a regime of floating exchange rates. A dynamic version of this approach is considered in which goods market adjustments are not instantaneous (institutional constraints and high cost of acquiring complete information). Exchange rates are strongly influenced by assest holders' expectations of future exchange rates which are influenced by beliefs concerning the future course of monetary policy.;The first Chapter is devoted on the history of exchange rate movement during the transition from fixed to floating exchange rates. The second Chapter deals with the efficiency of foreign exchange markets. In Chapter III, the theoretical model is solved by taking into account "real" factors, as well as monetary ones, in determining the behavior of exchange rates. Special emphasis is given to the role of expectations in this exchange rate determination and a rational expectations formulation of the model is proposed. Chapter IV shows the empirical results and the tests of the different hypotheses (Price flexibility, PPP, equal elasticities, and equal coefficients of adjustment in both countries). Chapter V examines some alternative formulations of the model by using variables such as long-run interest rates, foreign exchange reserves, the trade balance, etc. Chapter VI is devoted to policy implications. The policy view analyzes the effectiveness of aggregate policies and points out that in the short-run nominal disturbances will tend to be transmitted internationally. The last Chapter presents the conclusion: "The empirical results are shown to be consistent with the GAP hypothesis and the deviation from PPP even though expectations are rational.".
-
Type
-
dissertation
-
Source
-
PQT Legacy CUNY.xlsx
-
degree
-
Ph.D.
-
Program
-
Economics
