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...