Kenneth W. Clements
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NBER Working Papers and Publications
|1980||Exchange Rates, Money and Relative Prices: The Dollar-Pound in the 1920's|
with Jacob A. Frenkel: w0429
This paper applies the analytical framework of the monetary approach to exchange rate determination to the analysis of the Dollar/Pound exchange rate during the first part of the 1920's. The analysis uses monthly data up to the return of Britain to gold in 1925. The equilibrium exchange rate is shown to be influenced by both real and monetary factors which operate through their influence on the relative demands and supplies of monies. Special attention is given to examination of the relationship between exchange rates and the relative price of traded to non-traded goods. In the empirical work the prices of traded goods are proxied by the wholesale price indices and the prices of non-traded are proxied by wages. One of the key findings of the paper is the estimate of the elasticity of the e...
Published: Clements, Kenneth W. and Frenkel, Jacob A. "Exchange Rates, Money, and Relative Prices: The Dollar-Pound in the 1920's." Journal of International Economics, Vol. 10, No 2, (May 1980), pp 249-262. citation courtesy of
|October 1978||Exchange Rates in The 1920's: A Monetary Approach|
with Jacob A. Frenkel: w0290
Current views about flexible exchange rate systems are based, to a large extent, on the lessons from the period of the 1920's during which many exchange rates were flexible. This paper re-examines the evidence from the perspective of the recently revived monetary approach (or more generally, asset-market approach) to the exchange rate. The analysis starts by developing a simple monetary model of exchange rate determination. The key characteristic of the model lies in the notion that, being a relative price of two monies, the equilibrium exchange rate is attained when the existing stocks of the two monies are willingly held. The equilibrium exchange rate is shown to depend on both real and monetary factors which operate through their influence on the relative demands and supplies of monies....
Published: Flanders, M. June (ed.) Development in an Inflationary World. New York: Academic Press, Inc., 1981.