Exchange Rates

Yesterday I read my favourite economics blogger, Eric Crampton, and in particular his article on exchange rates.  He in turn linked to Matt Nolan, with the exchange rate as a price.

This led to me thinking about the exchange rate, and what it means.  Intuitively I feel that a high exchange rate is generally a reflection that a country is doing well relative to the rest of the world, and if you want a lower exchange rate that presumably also means you want to do less well.  But I’ve also usually assumed that there are some in society who are hurt by a high exchange rate, and I want to test that assumption today.

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