%0 Report
%A Jiménez Martín, Juan Ángel
%A Flores de Frutos, Rafael
%T The fit of dynamic equilibrium models of exchange rate
%J Documentos de trabajo del Instituto Complutense de Análisis Económico (ICAE)
%D 2004
%U https://hdl.handle.net/20.500.14352/56613
%X The two-country monetary model has become a fundamental tool for explaining the behavior of the exchange rate. However, the popularity of this approach is not justified by its empirical support. One of the reasons for the empirical “failure” of exchange rate models could be the econometric approach applied. In this paper, an alternative procedure for evaluating the fit of dynamic equilibrium models of exchange rate is suggested. This approach is applied to three theoretical models: Lucas (1982), Svensson (1985), and Grilli and Roubini (1992).
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