Chapter 14: Exchange Rates and the Foreign Exchange Market: An Asset Approach Exchange Rates and the . currency denomination.

Currency Substitution: A Test of Its Importance Dallas S. Batten . No MonetaryIndependence Under Fixed Exchange Rates The obligation . Most of this substitution involves interest-earning assets .

On a more general level, although acknowledging the importance of international financial markets in determining exchange rate behaviour, asset market models remain firmly embedded .

. is due to a number of factors: the growing importance of foreign exchange as an asset class . The asset market model of exchange rate determination states that

Second, the importance of the "relative wage" channel may be diminished if the exchange rate movements are anticipated. . target firm with firm-specific assets, real exchange rate .

WORKING PAPER SERIES NO. 314 / MARCH 2004 EXCHANGE RATE RISKS AND ASSET PRICES IN A importance of exchange rates for asset . forex developments would demonstrate the relative importance of "non-fundamental" exchange rate .

In particular, large gross cross-holdings of foreign assets and liabilities means that the valuation channel of exchange rate adjustment has grown in importance, relative to the .

The respondents were asked to indicate the importance of foreign debt for exchange rate exposures in general . As shown in Panel A, the average (median) firm has: total assets of DKK .

Each government issues a single financial asset, its . theory, as well as recent experience, underlines the importance of the volatility of exchange rate .

Importance of the Flexible Exchange Rates. Flexible exchange rates offer an automatic partial cushioning . about political changes or new restrictions on international asset .

This case is a vivid illustration of the importance of co-movements between exchange rates and asset prices. It also underlines that (continued

Asset Prices, Exchange

importance of exchange rates for asset

Rates, and Monetary Policy. Forecasting output and inflation: the . to their absolute minimum of zero, is a problem of practical importance.

. opportunities, inducinga deterioration in a country'stradebalanc e.4 The objective of the present
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