The monetary approach to the exchange rate

MacDonald, R. and Taylor, M. P. (1991) The monetary approach to the exchange rate. Economics Letters, 37(2), pp. 179-185. (doi:10.1016/0165-1765(91)90128-8)

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Abstract

In this paper the monetary approach to the exchange rate is re-examined for three key currencies, using data for the recent experience with flexible exchange rates. Two important findings are reported in the paper. First, it is demonstrated, using a multivariate cointegration technique, that an unrestricted monetary model is a valid framework for analysing the long run exchange rate. Second, we find, inter alia, that the proportionality of the exchange rate to relative money supplies is valid for the German mark.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:MacDonald, Professor Ronald
Authors: MacDonald, R., and Taylor, M. P.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Economics Letters
Publisher:Elsevier
ISSN:0165-1765
ISSN (Online):1873-7374

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