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THE ROLE OF NATIONAL DEBTS IN THE DETERMINATION OF THE YEN‐DOLLAR EXCHANGE RATE
Author(s) -
Litsios Ioannis,
Pilbeam Keith
Publication year - 2019
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12735
Subject(s) - economics , liberian dollar , debt , monetary economics , exchange rate , us dollar , econometrics , macroeconomics , finance
An intertemporal optimization model is developed to examine the determinants of the long‐run nominal yen‐dollar exchange rate in the presence of national debts. The model is tested empirically using data from Japan and the United States. The proposed theoretical specification is well supported by the data and shows that relative national debts as well as monetary and financial factors may play a significant role in the determination of the long‐run nominal exchange rate between the yen and the dollar. ( JEL F31, G11, G15)