Gardeazabal, Javier; Regulez, Marta; Vazquez, Jesus - In: International Economic Review 38 (1997) 2, pp. 389-404
In this paper, the authors test the asset market approach or canonical model of exchange rates. They treat exchange rate fundamentals as unobservable. The empirical results do not reject the canonical model and, therefore, the embedded rational expectations assumption, in sharp contrast with...