Acta Oeconomica Pragensia 2007, 15(4):56-68 | DOI: 10.18267/j.aop.75

Exchange Rate Dynamics and the Disconnect

Miroslava Jindrová
Ing. Miroslava Jindrová - doctoral student; Department of Monetary Theory and Policy, Faculty of Finance and Accounting, University of Economics, Prague, nám. W. Churchilla 4, 130 67 Prague 3, Czech Republic, jindrovm@vse.cz

In this paper we bring the survey of the contemporaneous research on the behaviour of exchange rate and so called exchange rate disconnect puzzle. We have introduced several directions in which research on this object could be developed. They are basically concerned with the monopolistically competition, which allows for exchange rate fluctuations from its long run equilibrium level, so that purchasing power parity condition doesn't holds. The alternative approach incorporates heterogeneous agents' setup.

Keywords: exchange rate determination, exchange rate disconnect, overshooting, volatility
JEL classification: E52, F31, F41

Published: August 1, 2007  Show citation

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Jindrová, M. (2007). Exchange Rate Dynamics and the Disconnect. Acta Oeconomica Pragensia, 15(4), 56-68. doi: 10.18267/j.aop.75
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