02088cas a2200241 a 4500 AALejournalIMF010568 230101c9999 xx r poo 0 0eng d 15.00 USD 9781451946840 1020-7635 BD-DhAAL BD-DhAAL International Monetary Fund. Research Dept. IMF Staff papers : Volume 26 No. 2. Washington, D.C. : International Monetary Fund, 1979. 1 online resource (226 pages) IMF Staff Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This IMF Staff Paper highlights recent developments in monetary models of exchange rate determination. The seminal contributors to the monetary approach to the balance of payments suggested that the approach could be applied to a flexible exchange rate regime with only minor modifications. Several characteristics of recent exchange rate behavior, however, are against the traditional approach. These include persistent deviations from purchasing power parity, the large variance of short-term exchange rate movements, and the importance of speculation in the determination of the exchange rate. Although maintaining the emphasis of early monetary models on the integration of international asset markets and the stability of the money demand function, the new approaches also account for deviations from purchasing power parity, the endogenous determination of the interest rate, and the possibility that national currencies are close substitutes in a portfolio of currencies. An integrated model, which is capable of empirical verification, is also presented. Mode of access: Internet IMF Staff Papers; IMF Staff Papers ; No. 1979/002 Full text available on IMF http://elibrary.imf.org/view/journals/024/1979/002/024.1979.issue-002-en.xml IMF e-Library