A Gravity View of Exchange Rate Disconnect ∗

@inproceedings{Fitzgerald2004AGV,
  title={A Gravity View of Exchange Rate Disconnect ∗},
  author={D. Fitzgerald},
  year={2004}
}
The empirical “gravity” equation is extremely successful in explaining bilateral trade. This paper shows how a multi-country model of specialization and costly trade (i.e. a microfounded gravity model) can be applied to explain empirical exchange rate puzzles. One such puzzle is the fact that nominal exchange rates are enormously volatile, but that this volatility does not appear to affect inflation. The gravity model is very successful in explaining this puzzle. In a sample of 25 OECD… CONTINUE READING

Citations

Publications citing this paper.

References

Publications referenced by this paper.
Showing 1-10 of 19 references

Do Distribution Margins Solve the Exchange-Rate Disconnect Puzzle?

J. Campa, L. Goldberg
2004
View 3 Excerpts
Highly Influenced

Identifying the Relationship Between Trade and Exchange Rate Volatility,

C. Broda
Romalis • 2003

One Money, One Market: Estimating the Effect of Common Currencies on Trade

Rose, A. 2000
Economic Policy 2000. • 2000

Accounting For US Real Exchange Rate Changes

Engel, C. 1999
Journal of Political Economy 107 (3), 507-538

Similar Papers

Loading similar papers…