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| Author: | Noussair, C. N. Plott, C. R. Riezman, R. G. |
| Title: | The principles of exchange rate determination in an international finance experiment |
| Journal: | Journal of Political Economy
1997 : AUG, VOL. 105:4, p. 822-861 |
| Index terms: | EXCHANGE RATES FINANCE EXPERIMENT DESIGN |
| Language: | eng |
| Abstract: | This study reports the experiments designed to explore the behavior of economies with clear features of international finance. Two artificial countries were created, each with its own currency. International trade could take place only through the operation of markets for currency. To produce general equilibrium models that captured much of the behavior of the economies, the law of one price and the flow of funds theory of exchange rate determination were used. Prices of goods and the exchange rate evolve over time toward the predictions of the models. |
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