The Relationship between Interest Rate and Exchange Rate (Reappraisal and Expansion of Quantitative Theory of Money)
In this paper, the relationship between exchange rate and interest rate is re-examined through a theoretical expansion and reformulating of the quantitative theory of money. Fisher's theory is expanded to include both internal and external monetary sectors to be considered simultaneously. A fra...
| Main Authors: | , |
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| Format: | Article |
| Language: | fas |
| Published: |
Allameh Tabataba'i University Press
2009-03-01
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| Series: | Faslnāmah-i Pizhūhish/Nāmah-i Iqtisādī |
| Online Access: | https://joer.atu.ac.ir/article_2908_12990f96f1184dbbfd3910ebceb3dadb.pdf |
| _version_ | 1797375699187662848 |
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| author | Mahnaz Rabiee Bijan Bid Abad |
| author_facet | Mahnaz Rabiee Bijan Bid Abad |
| author_sort | Mahnaz Rabiee |
| collection | DOAJ |
| description | In this paper, the relationship between exchange rate and interest rate is re-examined through a theoretical expansion and reformulating of the quantitative theory of money. Fisher's theory is expanded to include both internal and external monetary sectors to be considered simultaneously. A framework for studying the relationship between interest and exchange rate is offered by relating export, import and capital account, net domestic and foreign assets of banking system in a generalized framework of quantitative theory of money and using the theories of interest rate parity and monetary approach to balance of payments. This paper concludes that there is a negative relationship between interest rate and exchange rate, ceteris paribus.
A significant contribution in this paper is the adaptation of transaction value to aggregate supply concepts using United Nations System of National Accounts (1993). This clarification actually removes the vogues of critical issues of the transaction value in macroeconomic analysis.
The proposed theoretical framework is tested for Iran's data. It is concluded that there is a negative relationship between exchange rate and interest rate again. |
| first_indexed | 2024-03-08T19:28:12Z |
| format | Article |
| id | doaj.art-1c5b66abf233463aa7343cd879085600 |
| institution | Directory Open Access Journal |
| issn | 1735-210X 2476-6453 |
| language | fas |
| last_indexed | 2024-03-08T19:28:12Z |
| publishDate | 2009-03-01 |
| publisher | Allameh Tabataba'i University Press |
| record_format | Article |
| series | Faslnāmah-i Pizhūhish/Nāmah-i Iqtisādī |
| spelling | doaj.art-1c5b66abf233463aa7343cd8790856002023-12-26T07:56:46ZfasAllameh Tabataba'i University PressFaslnāmah-i Pizhūhish/Nāmah-i Iqtisādī1735-210X2476-64532009-03-0193267962908The Relationship between Interest Rate and Exchange Rate (Reappraisal and Expansion of Quantitative Theory of Money)Mahnaz Rabiee0Bijan Bid Abad1عضو هیأت علمی دانشگاه آزاد اسلامی واحد تهران- جنوبپژوهشگر و مدرس دانشگاهIn this paper, the relationship between exchange rate and interest rate is re-examined through a theoretical expansion and reformulating of the quantitative theory of money. Fisher's theory is expanded to include both internal and external monetary sectors to be considered simultaneously. A framework for studying the relationship between interest and exchange rate is offered by relating export, import and capital account, net domestic and foreign assets of banking system in a generalized framework of quantitative theory of money and using the theories of interest rate parity and monetary approach to balance of payments. This paper concludes that there is a negative relationship between interest rate and exchange rate, ceteris paribus. A significant contribution in this paper is the adaptation of transaction value to aggregate supply concepts using United Nations System of National Accounts (1993). This clarification actually removes the vogues of critical issues of the transaction value in macroeconomic analysis. The proposed theoretical framework is tested for Iran's data. It is concluded that there is a negative relationship between exchange rate and interest rate again.https://joer.atu.ac.ir/article_2908_12990f96f1184dbbfd3910ebceb3dadb.pdf |
| spellingShingle | Mahnaz Rabiee Bijan Bid Abad The Relationship between Interest Rate and Exchange Rate (Reappraisal and Expansion of Quantitative Theory of Money) Faslnāmah-i Pizhūhish/Nāmah-i Iqtisādī |
| title | The Relationship between Interest Rate and Exchange Rate
(Reappraisal and Expansion of Quantitative Theory of Money) |
| title_full | The Relationship between Interest Rate and Exchange Rate
(Reappraisal and Expansion of Quantitative Theory of Money) |
| title_fullStr | The Relationship between Interest Rate and Exchange Rate
(Reappraisal and Expansion of Quantitative Theory of Money) |
| title_full_unstemmed | The Relationship between Interest Rate and Exchange Rate
(Reappraisal and Expansion of Quantitative Theory of Money) |
| title_short | The Relationship between Interest Rate and Exchange Rate
(Reappraisal and Expansion of Quantitative Theory of Money) |
| title_sort | relationship between interest rate and exchange rate reappraisal and expansion of quantitative theory of money |
| url | https://joer.atu.ac.ir/article_2908_12990f96f1184dbbfd3910ebceb3dadb.pdf |
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