Exchange Rates and Interest Parity*
Charles Engel, University of Wisconsin, Madison, WI, USA, National Bureau of Economic Research, Cambridge, MA, USA
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.
Keywords
Exchange rates
Uncovered interest parity
Foreign exchange risk premium
JEL classification codes
F31
F41
1 Exchange Rates and Interest Parity
This chapter surveys empirical and theoretical research ...
Get Handbook of International Economics now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
