Post Keynesian versus Neoclassical Explanations of Exchange Rate Movements: A Short Look at the Long Run

John Harvey

No 200501, Working Papers from Texas Christian University, Department of Economics

Abstract: In this paper, a series of empirical tests are conducted comparing the explanatory power of the neoclassical approach (in particular, purchasing power parity and the monetary model) with that of a long-run exchange rate model based on Post Keynesian premises (the tests use annual data for the dollar-deutsche mark and the dollar-yen from 1975 through 1998). It is shown that, despite the shift in time horizon and the biasing of the tests in favor of the neoclassical approach, the Post Keynesian approach still shows a much tighter fit to the historical facts.

Keywords: exchange rates; Post Keynesian; Neoclassical; long run (search for similar items in EconPapers)
JEL-codes: F31 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2005-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published in Journal of Post Keynesian Economics, Winter 2005-6, pages 161-79

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http://www.econ.tcu.edu/RePEc/tcu/wpaper/wp05-01.pdf First version, 2005 (application/pdf)

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Journal Article: Post Keynesian versus neoclassical explanations of exchange rate movements: a short look at the long run (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:tcu:wpaper:200501

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