01705cas a2200241 a 4500 AALejournalIMF008431 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451853230 1018-5941 BD-DhAAL BD-DhAAL Mercereau, Benoit. Stock Markets and the Real Exchange Rate : An Intertemporal Approach / Benoit Mercereau. Washington, D.C. : International Monetary Fund, 2003. 1 online resource (35 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The paper presents an N-country model with stock markets, in which a closed-form solution for the real exchange rate is derived. Risky asset prices and allocation of risky assets among countries are determined endogenously. Such a framework allows an analysis of how fundamental parameters, such as the variance and covariance of the risky assets or demographic variables, affect the real exchange rate. The predictions of the model are contrasted with the Balassa-Samuelson effect. A new transmission channel of the real exchange rate for parameters such as income on net foreign assets, risk aversion, and risk-hedging opportunities is also explored. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2003/109 Full text available on IMF http://elibrary.imf.org/view/journals/001/2003/109/001.2003.issue-109-en.xml IMF e-Library