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C/F/127. Dissertation. Exchange Rates and Fundamentals

WORDS:
10000
DATE:
2006
PRICE:
109.99 GBP

The following research provides an overview of the theoretical and empirical modelling of floating exchange rates over the last 30 years. It presents a detailed walk-through the main ?first generation? models of exchange rates, which rely on economic fundamentals to determine exchange rate movements. Particularly the Mundell-Fleming, Dornbusch overshooting and Portfolio balance models are reviewed. This is followed by a survey of the empirical performance of these models. The next chapter is devoted to examination of general causal links between fundamental factors and exchange rate movements, following the framework of Engel and West (2003). Finally, some alternative approaches to exchange rate determination such as the noise trader approach the use of technical analysis and behavioural finance are outlined.

 

KEYWORDS: Exchange Rates, Dornbusch, Portfolio balance, Mundell-Fleming, fundamental factors, ma,