Exchange Rates and Oil Prices |
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| Authors: | Robert A Amano & Simon van Norden |
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| Institution: | Bank of Canada, Ottawa, Ontario, Canada,;Service de l'enseignement de la finance, Ecole de Haute Etudes Commerciales, Montreal, Quebec |
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| Abstract: | The paper documents a robust and interesting relationship between the real domestic price of oil and real effective exchange rates for Germany, Japan and the United States. It also offers an explanation of why the real oil price captures exogenous terms-of-trade shocks, and why such shocks could be the most important factor determining real exchange rates in the long run. |
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