O'Reilly logo

The Economics of Exchange Rates (Collected Works of Harry Johnson) by Harry G. Johnson, Jacob A. Frenkel

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

CHAPTER 6

AN EMPIRICAL ANALYSIS OF THE MONETARY APPROACH TO THE DETERMINATION OF THE EXCHANGE RATE

ROBERT J. HODRICK

Graduate School of Industrial Administrationand Carnegie-Mellon Institute of Research

I. INTRODUCTION

This paper develops tests of the monetary approach to the determination of exchange rates using data from the flexible exchange-rate period which followed the collapse of the Bretton Woods fixed-parity system. Two types of time-series models are analysed to test several aspects of the theory.

As usually formulated, the monetary approach stresses that the exchange rate, as the relative price of two monies, is determined by the equilibrium between the demands for and the supplies of the stocks of monies outstanding.1 This follows ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required