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Exchange Rate Determination Using A Linear Regression Model: A Monetary Approach

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  • Goedecke, E. J.
  • Dushmanitch, V. Y.
  • Ortmann, G. F.

Abstract

The monetary approach to exchange rate determination has been criticised because of the lack of empirical evidence. In this research note, a linear regression equation was estimated according to the monetary approach to explain changes in the nominal United States dollar/rand exchange rate for the years 1960-1988. Results indicate that this exchange rate is determined by relative United States and South African money supplies, nominal interest rates and real incomes. The R2 value was 0.965 percent.

Suggested Citation

  • Goedecke, E. J. & Dushmanitch, V. Y. & Ortmann, G. F., 1992. "Exchange Rate Determination Using A Linear Regression Model: A Monetary Approach," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 31(1), March.
    • Handle: RePEc:ags:agreko:267512
    DOI: 10.22004/ag.econ.267512
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    References listed on IDEAS

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    5. Dushmanitch, V.Y. & Darroch, M.A.G., 1989. "Implications of the expansionary monetary policy for the maize and beef sectors of South Africa," 1989 Annual Conference, September 25-27, Bloemfontein, South Africa 314737, Agricultural Economics Association of South Africa (AEASA).
    6. G. Edward Schuh, 1974. "The Exchange Rate and U. S. Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(1), pages 1-13.
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