Open AccessMuch Appreciated? The Rise of the Canadian Dollar, 2002-2008
Author(s) -
Michael B. Devereux
Publication year - 2009
Publication title -
review of economic analysis
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.101
H-Index - 1
ISSN - 1973-3909
DOI - 10.15353/rea.v1i1.1477
Subject(s) - liberian dollar , economics , exchange rate , us dollar , period (music) , monetary economics , financial economics , finance , physics , acoustics
Between 2002 and 2008, the Canadian dollar appreciated in real terms against the US dollar by 60 percent. This large change in real exchange rates between such major trading partners as Canada and the US is almost unprecedented. This paper explores the historical background to the movement of the Canadian dollar during this period, discusses the most accepted explanations for the appreciation, and speculates on the implications for the Canadian economy. The discussion is placed within the framework of recent developments in the theoretical and empirical literature on exchange rates.