Exchange-rate models.

NBER Reporter | September 22, 2006| | Copyright

Recent research that my co-authors and I have undertaken, as well as related research by other NBER researchers, suggests that theoretical models of foreign exchange rates are "not as bad as you think." Since the 1970s, models have emphasized the role of exchange rates as asset prices. The new work, looking at present-value models of exchange rates, highlights the role of expectations in determining exchange rate movements. In this article, I briefly summarize some of the work that I have been involved with, along with a few related papers by other researchers. I also report ...

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