The monetary approach to exchange rate determination has served as a theoretical workhorse in open economy macroeconomics, yet empirical evidence concerning its validity is mixed: tests based on structural forms of the model are typically negative, while cross-equation restrictions tests based on nonstructural representations are typically favorable. The authors s eek a reconciliation of these results by investigating the small-sample performance of cross-equation restrictions tests. Their investigatio n indicates that the tests have surprisingly low power in detecting nontrivial departures from the model, thus the authors conclude that something is amiss with standard versions of the monetary approach t o exchange rate determination. Copyright 1993 by MIT Press.
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Volume (Year): 75 (1993) Issue (Month): 1 (February) Pages: 123-28 Download reference. The following formats are available: HTML
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