The effects of nominal shocks on the real exchange rate /

This study focuses on the effects of nominal shocks on the real exchange rate. The model used to determine the effects of a monetary expansion on the real exchange rate assumes instantaneously clearing asset markets and sticky goods prices. A monetary expansion causes the nominal exchange rate to initially overshoot its long run equilibrium value followed by a series of appreciations. The real exchange rate depreciates sharply and then appreciates until its initial value is restored. / A simple monetary model, a sticky price monetary model and a random walk model are empirically tested with Canadian/U.S. data over the 1972-1989 time period. Both monetary models were rejected and the random walk model represented the best fit to the data. This evidence supports the hypothesis that the Canadian/U.S. nominal exchange rate follows a random walk process. / An empirical examination of the Canadian real exchange rate over the 1970-1989 period confirms the hypothesis that since the advent of the floating exchange rate period, the Canadian real exchange rate movements have been much larger than most economists predicted.

Identiferoai:union.ndltd.org:LACETR/oai:collectionscanada.gc.ca:QMM.61180
Date January 1991
CreatorsAbbey, Laurie-Ann Cecilia
PublisherMcGill University
Source SetsLibrary and Archives Canada ETDs Repository / Centre d'archives des thèses électroniques de Bibliothèque et Archives Canada
LanguageEnglish
Detected LanguageEnglish
TypeElectronic Thesis or Dissertation
Formatapplication/pdf
CoverageMaster of Arts (Department of Economics.)
RightsAll items in eScholarship@McGill are protected by copyright with all rights reserved unless otherwise indicated.
Relationalephsysno: 001275790, proquestno: AAIMM74854, Theses scanned by UMI/ProQuest.

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