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Abstract

This paper reopens the subject of currency preferences while modeling theexchange rates among three major currencies - the US dollar, the euro andthe Japanese yen. The exchange rate model presented in this paper includesnot only traditional determinants of bilateral exchange rates but incorporatesthird-currency effects in addition. The obtained estimation results areinterpreted from the perspective of possible currency substitution andcomplementarity relationships. We find evidence of currency complementaritybetween the yen and the euro, and currency substitution of the dollar forboth the euro and the yen. The estimated third-currency effects are consistentwith our findings on currency substitution and complementarity among thethree major currencies.



Item Type: MPRA Paper -

Institution: Department of Economics, Technical University of Ostrava-

Original Title: Currency Preferences in a Tri-Polar Model of Foreign Exchange-

Language: English-

Keywords: Exchange Rate Modeling; Currency Substitution; Currency Complementarity; Third-Currency Effects-

Subjects: F - International Economics > F3 - International Finance > F36 - Financial Aspects of Economic IntegrationF - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F42 - International Policy Coordination and TransmissionF - International Economics > F3 - International Finance > F31 - Foreign Exchange-





Autor: Melecky, M

Fuente: https://mpra.ub.uni-muenchen.de/4186/







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