Real Exchange Rates: Definition, Measurement, and Trends in France, West Germany, Italy and the United Kingdom

  • Donald V. Coes
Part of the Studies in Banking and International Finance book series (SBIF)


One of the disappointments of over a decade of greater exchange rate flexibility among the major economies has been the limited degree to which the current system protects its participants from sharp and prolonged changes in real, or price-adjusted exchange rates. The argument in the 1960s and early 1970s, by the advocates of floating rates, that flexible rates would tend to insulate members of the present exchange system from external disturbances now appears too optimistic. The consensus view of the exchange rate as the key endogenous variable of an open economy emphasized its equilibrating effect on the current account, and in retrospect had too little to say about the effects of international capital mobility.


Exchange Rate Real Exchange Rate Purchase Power Parity Nominal Exchange Rate European Monetary System 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. ARTUS, J. R. and MCGUIRK, A. K. (1981) ‘A Revised Version of the Multilateral Exchange Rate Model’, International Monetary Fund Staff Papers (June).Google Scholar
  2. BALASSA, B. (1964) ‘The Purchasing Power Parity Doctrine: A Reappraisal’, Journal of Political Economy, 72: 584–96.CrossRefGoogle Scholar
  3. COES, D. V. (1983) ‘Exchange Market Intervention in Four European Countries’, in Hodgman, D. R. (ed.) The Political Economy of Monetary Policy: National and International Aspects (Boston: Federal Reserve Bank of Boston).Google Scholar
  4. CORDEN, W. M. (1960) ‘The Geometric Representation of Policies to Attain Internal and External Balance’, Review of Economic Studies, 28:1–22.CrossRefGoogle Scholar
  5. DORNBUSCH, R. (1976) ‘Expectations and Exchange Rate Dynamics’, Journal of Political Economy (December).Google Scholar
  6. FRENKEL, J. A. (1978) ‘Purchasing Power Parity: Doctrinal Perspective and Evidence from the 1920’s’, Journal of International Economic, 8(2): 169–92.CrossRefGoogle Scholar
  7. FRENKEL, J. (1981) ‘The Collapse of Purchasing Power Parities During the 1970’s’, European Economic Review, 16:145–65.CrossRefGoogle Scholar
  8. GENBERG, H. (1978) ‘Purchasing Power Parity under Fixed and Flexible Exchange Rates’, Journal of International Economics, 8(2): 247–76.CrossRefGoogle Scholar
  9. MEADE, J. E. (1951) The Balance of Payments (London: Oxford University Press).Google Scholar
  10. MUSSA, M. (1985) ‘Official Intervention and Exchange Rate Dynamics’, in Bhandari, J. S. (ed.), Exchange Rate Management under Uncertainty (Cambridge, Mass.: MIT Press).Google Scholar
  11. RICHARDSON, J. D. (1978) ‘Some Empirical Evidence on Commodity Arbitrage and the Law of One Price’, Journal of International Economics, 8(2).Google Scholar
  12. SACHS, J. (1980) ‘Wages, Flexible Exchange Rates, and Macroeconomic Policy’, Quarterly Journal of Economics, June.Google Scholar
  13. SALTER, W. E. G. (1959) ‘Internal and External Balance: The Role of Price and Expenditure Effects’, Economic Record, 35(71).Google Scholar
  14. SWAN, T. (1960) ‘Economic Control in a Dependent Economy’, Economic Record, 36(73).Google Scholar
  15. WESTERFIELD, J. M. (1977) ‘An Examination of Foreign Exchange Risk under Fixed and Floating Exchange Rate Regimes’, Journal of International Economics, 7(2).Google Scholar
  16. WILLIAMSON, J. (1983) The Exchange Rate System, Policy Analysis in International Economics no. 5, (Washington, D.C.: Institute for International Economics).Google Scholar

Copyright information

© Donald R. Hodgman and Geoffrey E. Wood 1989

Authors and Affiliations

  • Donald V. Coes

There are no affiliations available

Personalised recommendations