The role of saving and investment in exchange rate determination under alternative monetary mechanisms.

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Abstract

Argues that the demand for national currencies depends on existing payment arrangements for imports and exports. Therefore, exchange rate movements depend on these arrangements. As a result, the relationship between exchange rate movements and various macroeconomic aggregates, like saving and investment, depend on what is called the monetary mechanism. These points are explicitly demonstrated by studying two extreme monetary mechanisms, one in which all payments are done with the seller's currency and one in which all payments are done with the buyer's currency.-from Authors

Original languageEnglish
JournalReprint Series - University of Stockholm, Institute for International Economic Studies
Volume235
StatePublished - 1984
Externally publishedYes

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