We first give a brief presentation of the existing single-equation structural models of exchange-rate determination and a survey of how the exchange rate is modeled in the main economy-wide macroeconometric models. We then show, with respect to the lira/$ exchange rate, that the out-of-sample...

We assume that the variations of the exchange rate depend on the current net demand of the base currency as a consequence of market making, and that the current net demand of the base currency depends on current and past variations of the exchange rate as a consequence of how future price...