This paper explores the interaction of fundamental and portfolio factors in the determination of the exchange rate. The weights on the factors evolve endogenously as a function of relative fundamental and portfolio errors. The model also generates exchange rate mixture distributions that may be...

The papers in this issue are concerned with the behaviour of exchange rates - their fundamental determinants, adjustment processes and policy implications. The authors combine theory with empirical evidence, test hypotheses as well as show the relevance of their analysis for policy. This...