Abstract
The nominal exchange rate is the rate at which the currency of one country can be exchanged for that of another. The overall value of a currency can be summarized through the ‘effective nominal exchange rate’, which is a weighted average of a country’s nominal bilateral exchange rates. Following the advent of freely floating exchange rates in 1973 there has been intense research on understanding the mechanisms of nominal exchange rate determination and the search for an adequate model, but no model has so far withstood rigorous empirical tests.
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Baillie, R.T. (2018). Nominal Exchange Rates. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2026
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2026
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