New Evidence Connecting Exchange Rates to Business Cycles

17 Pages Posted: 21 Nov 2012

See all articles by Alan C. Stockman

Alan C. Stockman

University of Rochester - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: 1998

Abstract

Economic theory predicts connections between fluctuations in a country's exchange rate and its real GDP relative to other countries. Past evidence of such connections has been very weak. An examination of periods of large or sustained changes in GDP (rather than small, temporary changes), however, reveals new evidence of these connections. Focusing on Japanese yen exchange rates, such examination shows that the yen tends to depreciate when Japanese real GDP, relative to a comparison country, rises above its trend for several consecutive quarters.

Suggested Citation

Stockman, Alan C., New Evidence Connecting Exchange Rates to Business Cycles (1998). FRB Richmond Economic Quarterly, vol. 84, no. 2, Spring 1998, pp. 73-89, Available at SSRN: https://ssrn.com/abstract=2126273

Alan C. Stockman (Contact Author)

University of Rochester - Department of Economics ( email )

Harkness Hall
Rochester, NY 14627
United States
585-275-7214 (Phone)

National Bureau of Economic Research (NBER)

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United States

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