Amb motiu del tancament d'estiu, la validació de documents es reprendrà a partir del 28 d'agost de 2026. Disculpeu les molèsties.
Con motivo del cierre de verano, la validación de documentos se reanudará a partir del 28 de agosto de 2026. Disculpad las molestias
Due to the summer closure, document validation will resume starting August 28, 2026. We apologize for any inconvenience.

Files

651857.pdf (2.44 MB)

Document type

Article

Version

Accepted version

Publication date

2015-09

All rights reserved

Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/106986

The failure of the monetary model of exchange rate determination

Journal Title

Authors

Director/Tutor

Journal ISSN

Volume Title

Related resource

https://doi.org/10.1080/00036846.2015.1031878

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.

Subject

Canvi, Canvi exterior, Política de preus, Poder adquisitiu

Subject (English)

Exchange, Foreign exchange, Prices policy, Purchasing power

Citation

Collections

Articles publicats en revistes (Economia)

Citation

AFAT, Dinçer, GÓMEZ-PUIG, Marta and SOSVILLA RIVERO, Simón. The failure of the monetary model of exchange rate determination. Applied Economics. 2015. Vol. 47, num. 43, pags. 4607-4629. ISSN 0003-6846. [consulted: 18 of August of 2026]. Available at: https://hdl.handle.net/2445/106986

Export metadata

JSON - METS

Share record