The impact of exchange rate movements on prices and economic activity is at the core of international macroeconomic theory and policy. In recent years, interest in this issue has increased, following strong exchange rate fluctuations, the unsustainability of the current account imbalances and the expected change in exchange rate regimes in some emerging economies. This book explores the PPP persistence puzzle, looking at the econometric aspects of exchange rate dynamics and their implications. Questions related to misalignment of the Chinese exchange rate are also investigated. The book also examines the importance of exchange rates dynamics in the pass-through process and explores econometric aspects of the exchange rate dynamics linked to structural shocks. This book is an excellent resource for all with a research interest in the econometrics of exchange rates dynamics.