Across Time and Regimes: 212 Years of the US-UK Real Exchange Rate

William D. Craighead, Miami University

Abstract: The behavior of the US-UK real exchange rate over the period 1794-2005 is examined.  This series includes five intervals of floating nominal exchange rates and four fixed exchange rate regimes.  A consistent pattern of higher real exchange rate volatility under floating nominal rates is evidence against nominal regime neutrality.  Over time, real exchange rate movements have increasingly been driven by movements in the nominal exchange rate rather than relative prices.  The persistence of the real exchange rate has been considerably higher in the postwar period.

JEL: F31, N20