02117cas a2200241 a 4500 AALejournalIMF010592 230101c9999 xx r poo 0 0eng d 15.00 USD 9781451930610 1020-7635 BD-DhAAL BD-DhAAL International Monetary Fund. Research Dept. IMF Staff papers : Volume 30 No. 4. Washington, D.C. : International Monetary Fund, 1983. 1 online resource (223 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 paper focuses on the portfolio-balance model as a framework for addressing unresolved issues about the behavior of exchange rates. The stocks of base money and bonds are determined by the interactions of monetary policies, government budget deficits, and official exchange market interventions. A home-country current account surplus that shifts the residence of private wealth toward the home country will reduce the risk premium on domestic currency, ceteris paribus, if and only if private residents of the home country have a relatively stronger preference for domestic bonds than do private residents of the foreign country. The basic conclusion that has been drawn from the regression analysis is that the risk premiums associated with this particular representation of the portfolio-balance model explain only a small part of the discrepancies between observed percentage changes in exchange rates and forward premiums. Part of the difficulty in obtaining structural estimates of portfolio-demand parameters may reflect deficiencies in specifying the portfolio-balance framework. Mode of access: Internet IMF Staff Papers; IMF Staff Papers ; No. 1983/004 Full text available on IMF http://elibrary.imf.org/view/journals/024/1983/004/024.1983.issue-004-en.xml IMF e-Library