ReferenceAbstract/Description* Dornbusch (1980) The main lessons that emerge from the analysis concern the inadequacy of the monetary approach as a complete theory of exchange rate determination, the central role of the current account in influencing exchange rates…and finally, the conclusion that an interest rate policy not oriented toward the external balance has aggravated exchange rate instability.Frenkel (1981) This paper…analyzes the efficiency of the foreign-exchange market and the volatility of exchange rates, as well as the relationships between exchange rates and interest rates. A key distinction is made between anticipated and unanticipated events, and it is shown that the key factor affecting exchange rates has been "news."Cornell (1982) This paper presents a test of the joint hypothesis that money supply announcements affect the real interest rate and that changes in the real interest rate affect the exchange rate in the short run. The test results are consistent with the joint hypothesis. For example, it is found that announcement of an unexpected jump in the money supply is accompanied by an increase in interest rates and an appreciation of the dollar. If the rise in interest rates was entirely due to higher inflationary expectations, the dollar should not appreciate. Edwards (1982a)A multi-currency model is established to investigate the relationship between spot rates, forward rates, and new information. In a world with more than two countries, the error term will be correlated across rates. Exchange rates can be expressed as a function of factors known in advance, and "news."Edwards (1982b) This paper uses a multi-currency approach to analyze the relationship between forward exchange rates, future spot rates and new information. The empirical results tend to support the hypothesis that the exchange rate can be expressed as a function of factors known in advance and "news."Cornell (1983) …[M]oney supply announcements have an impact on the real rate, but they do not allow us to conclude that monetary shocks affect the real rate. This apparent paradox arises because the announcements also function as signals which reveal information about real variables such as expected future output and risk preferences. Further tests, using data in addition to money supply announcements, are required to separate those hypotheses that rely on the signaling effect from those which assume that money affects the real rate.The following abbreviations are used for announcements:

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The difference between actual borrowings and borrowing limits alone generates information asymmetry in the credit card market. This information asymmetry can make the market incomplete and create ex post misallocations. Households that are denied credit could well turn out to be ex post less risky than some credit card holders who borrow large portions of their borrowing limits. Using data from the U.S. Survey of Consumer Finances, the authors find a positive relationship between borrower quality and borrowing limits, controlling for banks' selection of credit card holders and the endogeneity of interest rates. Their estimation reveals how interest rates have a negative influence on the optimal borrowing limits offered by banks.

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