Please use this identifier to cite or link to this item: http://hdl.handle.net/2445/106986
Title: The failure of the monetary model of exchange rate determination
Author: Afat, Dinçer
Gómez-Puig, Marta
Sosvilla Rivero, Simón, 1961-
Keywords: Canvi
Canvi exterior
Política de preus
Poder adquisitiu
Exchange
Foreign exchange
Prices policy
Purchasing power
Issue Date: Sep-2015
Publisher: Taylor and Francis
Abstract: In this paper, we test three popular versions of the monetary model (flexible price, forward-looking and real interest differential models) for the OECD member countries by applying Johansen cointegration technique. Based on country-by-country analysis, we conclude that monetary models do not provide the expected results. We reveal several shortcomings of the models and examine the building blocks of the fundamental version. Although researchers always blame the deviations from purchasing power parity as the reason for the failure of the monetary model, our analysis indicates that invalidity of Keynesian money demand function is also responsible for unfavourable results.
Note: Versió postprint del document publicat a: https://doi.org/10.1080/00036846.2015.1031878
It is part of: Applied Economics, 2015, vol. 47, num. 43, p. 4607-4629
Related resource: https://doi.org/10.1080/00036846.2015.1031878
URI: http://hdl.handle.net/2445/106986
ISSN: 0003-6846
Appears in Collections:Articles publicats en revistes (Economia)

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