Buffer stocks, exchange rates and deviations from purchasing power parity

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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