The Long-run U.S./U.K. Real Exchange Rate

This academic volume by Charles Engel serves as a foundational analysis of long-term real exchange rate behavior between the United States and the United Kingdom. Developed during his tenure at the University of California, San Diego, the work addresses the persistent puzzle of why real exchange rates do not revert to purchasing power parity as quickly as traditional economic theory suggests, providing a rigorous empirical investigation into the role of non-traded goods and price stickiness.

The research reflects the broader movement in macroeconomics during the late 20th century to reconcile international trade models with empirical data. Engel’s design emphasizes a methodical examination of historical price indices and trade data to challenge existing paradigms in international finance. The study has been widely recognized in scholarly circles for its clarity and for establishing a benchmark methodology that researchers continue to cite when investigating the dynamics of global currency markets.