This paper investigates the behavior of foreign exchange rates. Empirical tests indicate that the distribution of the underlying stochastic process for foreign exchange rate changes was stable paretion during fixed rate periods while a Student model provides a relatively better description on...

The aim of this study is to investigate the relationship between relative price levels and exchange rates with the view of establishing the validity of the purchasing power parity theory. Included in the paper is a discussion of the interpretation of such analyses in an efficient market...