The Role of National Debts in the Determination of the Yen‐Dollar Exchange Rate

14 Pages Posted: 27 Feb 2019

See all articles by Ioannis Litsios

Ioannis Litsios

University of Plymouth - Plymouth Business School

K. Pilbeam

University of London

Date Written: April 2019

Abstract

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 Classification: F31, G11, G15

Suggested Citation

Litsios, Ioannis and Pilbeam, K., The Role of National Debts in the Determination of the Yen‐Dollar Exchange Rate (April 2019). Economic Inquiry, Vol. 57, Issue 2, pp. 1182-1195, 2019, Available at SSRN: https://ssrn.com/abstract=3342644 or http://dx.doi.org/10.1111/ecin.12735

Ioannis Litsios (Contact Author)

University of Plymouth - Plymouth Business School ( email )

Mast House
Plymouth, Devon PL4 8AA
United Kingdom

K. Pilbeam

University of London ( email )

Senate House
Malet Street
London, WC1E 7HU
United Kingdom

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