Recent theoretical developments in exchange rate economics have led to                  important new insights into the functioning of the foreign exchange market. The                  simple models of the 1970s, which could not withstand empirical evaluation, have                  been succeeded by more complex models that draw on theoretical work in such areas as                  the microstructure of financial markets and open economy macroeconomics.                  Additionally, new and powerful econometric techniques allow researchers to subject                  exchange rates to stronger empirical analysis.This book discusses the divergent                  theoretical and empirical paradigms used today for setting and predicting exchange                  rates; the chapters reflect current debates in the field. Some chapters base their                  analyses on the theoretical framework of representative and fully informed rational                  agents; others are grounded in the hetereogeneity of agents who use different and                  incomplete sets of information. Still other chapters analyze empirical data to                  uncover the fundamental characteristics of exchange rates. Taken together, these                  competing analyses document the current state of exchange rate economics and point                  the way to a new consensus about how to predict and explain exchange rate                  movements.

Exchange Rate Economics: Where Do We Stand? (CESifo Seminar Series) PDF

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