It is generally believed that standard macroeconomic models of foreign exchange rates do not fit the data well. However, this column argues that a model that includes real interest rates, expected inflation, the US trade balance, and measures of global risk and liquidity demand fits the data for the US dollar against other G10 currencies in the 21st century. Both monetary and non-monetary variables help explain exchange rate movements. The model fit has improved gradually since the 1970s,

Tag-uri: Inflatie