Economics, Econometrics and Finance
4 years ago

New Study Reveals Faster Adjustment of Real Exchange Rates to Shocks

RePEc: Research Papers in Economics
Large Data Sets, Nonlinearity and the Speed of Adjustment to Real Exchange Rate Shocks
Hyeyoen Kim

Paper Summary

Real exchange rates adjust slowly to shocks, which is puzzling. By analyzing a lot of data and using a new method, researchers found that considering various factors in a nonlinear way can speed up this adjustment process significantly.

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