MacDonald, R. (1985) Buffer stocks, exchange rates and deviations from purchasing power parity. Empirical Economics, 10(3), pp. 163-175. (doi: 10.1007/BF01979486)
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Abstract
In this paper an extension of the Monetary Approach to the Exchange Rate reduced form is presented and estimated for four bilateral exchange rates with data from the recent floating experience. The extension incorporates two features: a more sophisticated modelling of money demand, using theCarr andDarby money demand specification, and allowing for deviations from purchasing power parity. The estimated results are supportive of our extended specification and we conclude by arguing that care should be taken in specifying the underlying structural relationships in asset reduced form exchange rate equations.
| Item Type: | Articles |
|---|---|
| Status: | Published |
| Refereed: | Yes |
| Glasgow Author(s) Enlighten ID: | MacDonald, Professor Ronald |
| Authors: | MacDonald, R. |
| College/School: | College of Social Sciences > Adam Smith Business School > Economics |
| Journal Name: | Empirical Economics |
| Publisher: | Springer |
| ISSN: | 0377-7332 |
| ISSN (Online): | 1435-8921 |
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