Apte, Prakesh; Sercu, Piet; Uppal, Raman - C.E.P.R. Discussion Papers - 2002
This Paper analyses the exchange rate in a ‘no-arbitrage’ or ‘real business cycle’ equilibrium model and provides empirical evidence for this model vis-a-vis PPP. Our contribution is to show, based on a generalization of the equilibrium model of exchange rates, that (i) the test equation...