NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

A Standard Monetary Model and the Variability of the Deutschemark-DollarExchange Rate

Kenneth D. West

NBER Working Paper No. 2102
Issued in December 1986
NBER Program(s):   ITI   EFG   IFM

This paper uses a novel teat to see whether the Herse (1985) and Woo (1985) models are consistent with the variability of the deutschemark - dollar exchange rate 1974-1984. The answer, perhaps surprisingly, is yes. Both models, however, explain the month to month variability as resulting in a critical way from unobservable shocks to money demand and purchasing power parity. It would therefore be of interest in future work to model one or both of these shocks as explicit functions of economic variables.

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Document Object Identifier (DOI): 10.3386/w2102

Published: Journal of International Economics, Vol. 23, 1987, pp. 57-76. citation courtesy of

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