Munich Personal RePEc Archive

A Structural Model of Exchange Rate Dynamics

Kuzmin, Anton (1971): A Structural Model of Exchange Rate Dynamics. Published in: Review of Business and Economics Studies , Vol. 2, No. 3 (2014): 86- 92.

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Abstract

The concept of formation of the equilibrium exchange rate on the conversion market was developed, taking into account foreign trade, capital flows and other components of the balance of payments. As the main determinants of theoretical-structural model of the dynamics of the exchange rate equal countries are used, in the terms of trade, capital mobility, cumulative releases, internal and external prices. The result is a new final structural dependence of the dynamics of the exchange rate on the key macroeconomic determinants. The results obtained are applied to the study of the concept of purchasing power parity that allowed to justify theoretically - from positions of macroeconomic approach - a fundamental mismatch between the value of the exchange rates and the theory of purchasing power parity.

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