We use a residual-based bootstrap method to re-examine the finding of the Granger causality relationship from exchange rates to fundamentals in Engel and West (Exchange rate and fundamentals, Journal of Political Economy 2005, 113 (3), 485–517), in which the evidence for the relation is taken...

In this paper, we study some continuous-time cash-in-advanced models in which interest rate smoothing is optimal. We consider both deterministic and stochastic models.