The random walk property of exchange rates is regarded as carrying implications for the kinds of shocks that have driven exchange rates and the models appropriate for analyzing their behavior. This paper describes the results of stochastic simulations of Dornbusch's (1976) sticky-price monetary...

Several questions are addressed about the time-series processes followed by dollar exchange rates. The stochastic process for exchange rates implied by structural models and the conditions under which they would be described by random walks are examined. Tests on the univariate time series for...

The focus of this analysis is on the output costs of disinflation. A model of inflation with both forward and backward elements seems to characterize reality. Such an inflation model is estimated using data for industrial countries, and the output costs of a disinflation path are calculated,...

This paper argues that determining the cyclical behavior of prices by applying the same stationarity-inducing transformation to the levels of both output and prices, and examining the correlations of the resulting series, can be misleading. A more appropriate procedure is to examine the...