Interest rate shocks and the dollar
This article examines the relationship
between shocks to short-term interest rates in
the United States, Germany, and Japan and
movements in the yen/dollar and mark/dollar
exchange rates since 1979. The evidence indicates
that much of the dollar's recent depreciation
against the yen is consistent with the behavior
of the U.S. federal funds rate and shortterm
interest rates in Japan since 1991.
