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Exchange Rate Dynamics

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The New Palgrave Dictionary of Economics

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Abstract

Exchange-rate dynamics refers to the response path of the exchange rate following the revelation of some economic shock when the country in question operates under a pure flexible exchange-rate system. The issue attracts research attention because of the volatile nature of the exchange rate and the belief that the exchange rate may affect the allocation of resources across countries and over time. If observed exchange-rate dynamics cannot be shown to have a rational basis, efficiency will suffer from decisions made conditioned on disequilibrium values of the exchange rate.

This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume

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  1. http://link.springer.com/referencework/10.1057/978-1-349-95121-5

    Nelson C. Mark

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  1. Nelson C. Mark
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    Mark, N.C. (2008). Exchange Rate Dynamics. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_1951-1

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    • DOI: https://doi.org/10.1057/978-1-349-95121-5_1951-1

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    • Publisher Name: Palgrave Macmillan, London

    • Online ISBN: 978-1-349-95121-5

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