RT Report
T1 The failure of the monetary model of exchange rate determination
A1 Afat, Dinçer
A1 Gómez-Puig, Marta
A1 Sosvilla Rivero, Simón Javier
AB In this paper, we test three popular versions of the monetary model (flexible price, forward-looking and real interest differential models) for the OECD member countries by applying Johansen cointegration technique. Based on country-by-country analysis, we conclude that monetary models do not provide the expected results. We reveal several shortcomings of the models and examine the building blocks of the fundamental version. Although researchers always blame the deviations from purchasing power parity as the reason for the failure of the monetary model, our analysis indicates that invalidity of Keynesian money demand function is also responsible for unfavourable results.
PB Asociación Española de Economía y Finanzas Internacionales
SN 1696-6376
YR 2015
FD 2015
LK https://hdl.handle.net/20.500.14352/27500
UL https://hdl.handle.net/20.500.14352/27500
LA spa
NO Government of Spain
DS Docta Complutense
RD 8 abr 2025