An Investigation of Real and Nominal Exchange

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9320728 Engel This research investigates real exchange rate behavior in several industrial countries. The main objective is to get a better understanding of which of the real exchange rate theories explain the movements of relative prices. The study uses a large data set covering a wide range of goods and countries. The data take into account transportation costs, marketing costs, and industry structure. In the empirical work, the investigator proposes a series of econometric tests that would allow him to examine whether his earlier findings, that the variability of the relative prices of some goods across countries is larger than the variability of relative prices within a country, holds when the additional factors alluded to above are taken into account. The results from the project are of considerable interest because they will provide a valuable contribution to the empirical real exchange rate literature. Also, the results may have ramifications for how relative price behavior is expected to change under European and North American market integration. ***