In this dissertation, we analyze whether the noise ratio statistic of Durlauf and Hall (1989), NRT, can be used as a non-nested model selection tool in a similar fashion to the Rivers and Vuong (2002) framework. For this purpose, we first show that, when scaled by the sample size T, NRT is...

This dissertation revisits the literature on the role of exchange rate flexibility in smoothing the adjustments of the economy to different disturbances. Recently, the role of flexible exchange rates in stabilizing the economy against real shocks has been challenged by the new open economy...