An Alternative Theory of Long-Run Exchange RateDetermination (okładka  miękka)

Conventional exchange rate models are based on thefundamental hypothesis that, in the long run, realexchange rates adjust in such a way as to makecountries equally competitive, eliminating tradesurpluses and deficits. The contention of this book,based on the theoretical underpinnings of absolutecompetitive advantage, is that movements of long-runexchange rate are determined by real unit costs oftradable goods. According to this argument, theempirical finding of persistent trade imbalances isnot the exception, but rather an anticipated outcome.When competitive absolute advantage replaces the, alltoo often embraced, principle of comparativeadvantage a framework emerges that stands inopposition to orthodox models. A theoreticallygrounded, empirically robust explanation of realexchange rate movements is constructed that can be ofpractical use to researchers, but also, and equallyimportantly, to policymakers.