Floating Exchange Rates in Peru, 1950-54
NBER Working Paper No. 3775
I test three potentially complementary models in an effort to capture the fundamentals that underlaid the market's determination of Peru's floating exchange rate through the period 1950-54: the first is an expectational purchasing power parity (PPP) model which maintains that asset market forces were driving the exchange rate to its perceived PPP level; the second is a flexible-price monetary model; and the third is a model along the lines described by Tsiang (1957) which emphasizes world prices for Peruvian exports as a fundamental determinant. I find that the expectational PPP model not only dominates the others, but also fits quite well.
Document Object Identifier (DOI): 10.3386/w3775
Published: Journal of Development Economics, Vol. 36, No. 1, January 1992
Users who downloaded this paper also downloaded* these: