(HL) model is able to forecast real exchange rates better than the random walk (RW) model at both short and long … also in terms of nominal effective exchange rate forecasting …

model is demonstrated by analyzing the pre- and post-financial crisis periods for forecasting exchange rates. The out …-of-sample forecast results reveal that the best performing model is the symmetric model with no interest rate smoothing, heterogeneous … effective. However, the post-financial crisis period shows that the Taylor rule is ineffective in forecasting exchange rates. In …