Soft power factors reveal key to taming exchange rate volatility
The article explores why exchange rates change by looking at factors beyond just economics. By studying 115 countries from 1996 to 2011, researchers found that things like government accountability, life expectancy, education levels, bank stability, and the importance of agriculture all affect how much exchange rates fluctuate. These "soft power" factors play a significant role in exchange rate volatility, especially in developing countries.