publication . Article . 2004

Measuring the costs of exchange rate volatility

Paul R. Bergin;
Open Access
  • Published: 01 Jan 2004
Abstract
Many countries go to great lengths to manage their exchange rates. Probably the most prominent recent example is the European Monetary Union, where all the members abandoned their national currencies and adopted the euro. A number of developing countries maintain other kinds of regimes of managed exchange rates, even though they face potent market pressures to let their exchange rates float. One of the main motives for these arrangements stems from the extreme volatility of exchange rates. This volatility introduces an element of uncertainty into doing business across borders. Arguably, this uncertainty hinders international trade and, therefore, takes a toll in...
Subjects
free text keywords: Foreign exchange rates ; Econometric models
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