Exchange Rates and the "News": Some Evidence Using U.K. Survey Data

Ronald MacDonald and T S Torrance

The Manchester School of Economic & Social Studies, 1988, vol. 56, issue 1, 69-76

Abstract: Using survey data, this paper investigates two theories concerning the consequences of unan ticipated increases in aM3, the broad U.K. monetary aggregate, over t he period 1981.10 to 1985.8. In order to decide whether market operat ors believe that monetary laxity will be reversed (the policy anticip ation hypothesis) or will lead to higher future inflation (the Fisher hypothesis), the effects on a variety of sterling exchange rates are investigated. It is concluded that the former theory is the better s upported. Copyright 1988 by Blackwell Publishers Ltd and The Victoria University of Manchester

Date: 1988
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Persistent link: https://EconPapers.repec.org/RePEc:bla:manch2:v:56:y:1988:i:1:p:69-76

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