Effects of Fundamentals on the Exchange Rate: A Panel Analysis for a Sample of Industrialised and Emerging Economies
Jose Eduardo de A. Ferreira
Studies in Economics from School of Economics, University of Kent
This paper tests the traditional monetary model of exchange rates for a sample of industrialized and emerging market economies by making use of panel techniques that allow for a high degree of heterogeneity across countries. The results demonstrated partial support for the monetary model for industrialised market economies but not for emerging ones. This constitutes a puzzle as it would expect countries with greater monetary instability to show a stronger association between exchange rates and monetary fundamentals.
Keywords: Foreign Exchange; Fundamentals; Panel Data; Unit Roots; Assets (search for similar items in EconPapers)
JEL-codes: F31 F37 F41 (search for similar items in EconPapers)
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