Exchange rates, financial innovation and divisia money: the sterling/dollar rate 1972–1990

Chrystal, K.A. and MacDonald, R. (1995) Exchange rates, financial innovation and divisia money: the sterling/dollar rate 1972–1990. Journal of International Money and Finance, 14(4), pp. 493-513. (doi:10.1016/0261-5606(95)00018-A)

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Abstract

In this paper we examine the usefulness of divisia money, relative to simple sum money, for exchange rate modelling in a period of rapid financial deregulation. This comparison is conducted using, as a convenient framework, the monetary model of the exchange rate. We demonstrate, inter alia, that for the sterling-US dollar exchange rate, over the period 1972: Q1 to 1990: Q2, that the use of divisia money makes a significant difference to both the long- and short-run modelling of the exchange rate.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:MacDonald, Professor Ronald
Authors: Chrystal, K.A., and MacDonald, R.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Journal of International Money and Finance
Publisher:Elsevier
ISSN:0261-5606
ISSN (Online):1873-0639

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