Jump to ContentJump to Main Navigation
Fundamental Determinants of Exchange Rates - Oxford Scholarship Online
Users without a subscription are not able to see the full content.

Fundamental Determinants of Exchange Rates

Jerome L. Stein and Polly Reynolds Allen


The NATREX approach offers an alternative paradigm to the Purchasing Power Parity for equilibrium real exchange rates. NATREX is the acronym for NATural Real EXchange, referring to a medium‐run, inter‐cyclical equilibrium real exchange rate, determined by real, fundamental factors. Importantly, the NATREX is a moving equilibrium real exchange rate, responding to continual changes in exogenous and endogenous real fundamentals. In a world of high capital mobility, the fundamentals of thrift, productivity, capital intensity, and net debt to foreigners become particularly important, influencing de ... More

Keywords: equilibrium real exchange rate, fundamental real variables, long‐term capital flows, NATREX, natural real exchange rate, optimizing behavior, productivity, rational, return on investment, thrift

Bibliographic Information

Print publication date: 1998 Print ISBN-13: 9780198293064
Published to Oxford Scholarship Online: November 2003 DOI:10.1093/0198293062.001.0001


Affiliations are at time of print publication.

Jerome L. Stein, author
Brown University
Author Webpage

Polly Reynolds Allen, author
University of Connecticut