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Impact of inflation shocks on foreign exchange rates reflects central bank stature
Abstract: The purchasing power parity theory of exchange rates is easily understood: A basket of goods should have the same price in different markets when that price is expressed in a common currency. However, the relationship between market-determined exchange rates and inflation shocks is not always straightforward. In the short run, central bank transparency can become an important determinant.
Keywords: exchange rates; international economics; inflation; monetary policy;
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https://www.dallasfed.org/research/economics/2024/0903
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Provider: Federal Reserve Bank of Dallas
Source: Dallas Fed Economics
Publication Date: 2024-09-03