International Investment Positions and Exchange Rate Dynamics

Michael Binder & Christian J. Offermanns
We revisit medium- to long-run exchange rate determination, focusing on the role of international investment positions. To do so, we make use of a new econometric framework accounting for conditional long-run homogeneity in heterogeneous dynamic panel data models. In particular, in our model the long-run relationship between effective exchange rates and domestic as well as weighted foreign prices is a homogeneous function of a country's international investment position. We find rather strong support for purchasing...
This data repository is not currently reporting usage information. For information on how your repository can submit usage information, please see our documentation.