02129cas a2200265 a 4500 AALejournalIMF015108 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475530520 1018-5941 BD-DhAAL BD-DhAAL Cevik, Serhan. Soft Power and Exchange Rate Volatility / Serhan Cevik, Richard Harris, Fatih Yilmaz. Washington, D.C. : International Monetary Fund, 2015. 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 Standard models-based exclusively on macro-financial variables-have made little progress in explaining the behavior of exchange rates. In this paper, we introduce a neglected set of 'soft power' factors capturing a country's demographic, institutional, political and social underpinnings to uncover the 'missing' determinants of exchange rate volatility over time and across countries. Based on a balanced panel dataset comprising 115 countries during the period 1996-2011, the empirical results are generally robust across different estimation methodologies and show a high degree of persistence in exchange rate volatility, especially in emerging market economies. After controlling for standard macroeconomic factors, we find that the 'soft power' variables-such as an index of voice and accountability, life expectancy, educational attainment, the z-score of banks, and the share of agriculture relative to services-have a statistically significant influence on the level of exchange rate volatility across countries. Mode of access: Internet Harris, Richard. Yilmaz, Fatih. IMF Working Papers; Working Paper ; No. 2015/063 Full text available on IMF http://elibrary.imf.org/view/journals/001/2015/063/001.2015.issue-063-en.xml IMF e-Library