Exchange rate determination: a theory of the decisive role of central bank cooperation and conflict |
| |
| Authors: | Robin Pope Reinhard Selten Johannes Kaiser Sebastian Kube Jürgen von Hagen |
| |
| Institution: | (1) Center for European Integration Studies and Experimental Economics Laboratory, Bonn University, Walter Flex Str 3, 53113 Bonn, Germany;(2) Experimental Economics Laboratory, Bonn University, Bonn, Germany;(3) Rationality in the Light of Experimental Economics Group, North Rhine Westphalian Academy, Bonn University, Bonn, Germany;(4) Deutsche Bundesbank (central bank of the Federal Republic of Germany), Frankfurt, Germany;(5) Institute for International Economics, Bonn University, Bonn, Germany |
| |
| Abstract: | Economists’ faith that variable exchange rates benevolently equilibrate has been empirically disconfirmed. That faith is here tackled at its theoretical core with an exchange rate model that although ultra abstract, includes the undeniable fundamentals of market power and differential goals of central bankers and large-scale private players. It permits a game theoretic analysis under the assumption that all agents maximize their payoffs. The paper then relaxes
the assumption of maximising agents, allowing for a more complex and thus realistic second version of the model that is interpretable
within SKAT, the Stages of Knowledge Ahead Theory of risk and uncertainty. In an experimental setting, this second version
of the model points to: a) the inability of agents in central banks, governments and the private real and financial sectors
to operate in maximising ways; b) destructive central bank conflict; and c) the widely discrepant outcomes arising from the
dynamics of individual personality differences. The paper’s theoretical and empirical findings thus both point to the merits
of a single world currency. |
| |
| Keywords: | |
| 本文献已被 SpringerLink 等数据库收录！ |
|
