Nominal Exchange Rates Impact Real Exchange Rate Volatility, Study Finds.
The article examines if changes in volatility of real exchange rates of OECD countries are linked to specific exchange rate systems. The study covers the period from 1960 to 2003, including fixed and floating exchange rate regimes. By using a statistical method, the researchers identify periods of stability and instability in exchange rate variance. The results indicate that the type of exchange rate system affects the volatility of real exchange rates.