Oleg Itskhoki, an esteemed Professor of Economics at Harvard, has garnered the 2022 John Bates Clark Medal for his influential research on international exchange rates. His work reveals that, contrary to traditional beliefs emphasizing macroeconomic fundamentals, financial market dynamics predominantly drive exchange rate fluctuations, especially in smaller economies. Recognized as a dual expert in both international trade and macroeconomics, Itskhoki’s contributions significantly advance the understanding of how exchange rates function globally, receiving endorsement from prominent figures like Kenneth Rogoff, who heralds his intellectual prowess and importance to the academic community.
"But in most countries of the world, the exchange rate looms very large... In smaller open economies... the exchange rate matters quite a lot."
"Instead, factors in a country's financial markets are the dominant driver [of exchange rates]... A more accurate framework for understanding exchange rates worldwide is at the core of his analysis."
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