Determinants of Euro against US Dollar Rate of Exchange (USD/EUR) in the Long Run

Sławomir I. Bukowski, Joanna E. Bukowska
International Journal of Economics and Business Administration, Volume III, Issue 2, 48-57, 2015
DOI: 10.35808/ijeba/70

Abstract:

The paper is a result of research which aimed to identify the factors determining the USD/EUR rate of exchange and the strength of the influence in the long run. In the research we used the Frenkel - Bilson model and an econometric model built on its basis.In the research we formulated a hypothesis that the USD/EUR rate of exchange is determined in an economic and statistically significant way by the following factors: M1 and M2 money supply in the euro area and USA, changes in the GDP rate of growth in the euro area and USA, changes in long term treasury bond yield to maturity in the euro area and USA. The results of the research confirmed the above hypothesis.


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