Long-Run Exchange Rate Modeling
AbstractIn this paper we survey the recent literature on long run, or equilibrium, exchange rate modeling. In particular, we review the voluminous literature which tests for a unit root in real exchange rates and the closely related work on testing for a unit root in the residual from a regression of the nominal exchange rate on relative prices. We argue that the balance of evidence is supportive of the existence of some form of long-run exchange rate relationship. The form of this relationship, however, does not accord exactly with a traditional representation of the long-run exchange rate. We offer some potential explanations for this lack of conformity.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 95/14.
Date of creation: 01 Jan 1995
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-16 (All new papers)
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