Abstract
There is an extensive literature on the factors determining the level of a floating exchange rate, and in particular its behaviour over time. In this chapter we shall discuss a selection of the models that have been proposed.1 We may identify the two extremes as the ‘Keynesian’ models where prices and wages are assumed fixed, and ‘monetary’ models in which they are assumed to be perfectly flexible, and some form of purchasing power parity is assumed to hold. Within both these broad groups we find considerable differences, in particular in the treatment of international capital flows. We shall consider simple versions of these in turn.
Chapter PDF
Author information
Authors and Affiliations
Copyright information
© 1994 Bo Södersten and Geoffrey Reed
About this chapter
Cite this chapter
Södersten, B., Reed, G. (1994). The Determination of a Floating Exchange Rate. In: International Economics. Palgrave, London. https://doi.org/10.1007/978-1-349-23320-5_27
Download citation
DOI: https://doi.org/10.1007/978-1-349-23320-5_27
Publisher Name: Palgrave, London
Print ISBN: 978-0-333-61216-3
Online ISBN: 978-1-349-23320-5
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)