IDEAS home Printed from https://ideas.repec.org/p/tcu/wpaper/200501.html
   My bibliography  Save this paper

Post Keynesian versus Neoclassical Explanations of Exchange Rate Movements: A Short Look at the Long Run

Author

Listed:
  • John Harvey

    (Department of Economics, Texas Christian University)

Abstract

In this paper, a series of empirical tests are conducted comparing the explanatory power of the neoclassical approach (in particular, purchasing power parity and the monetary model) with that of a long-run exchange rate model based on Post Keynesian premises (the tests use annual data for the dollar-deutsche mark and the dollar-yen from 1975 through 1998). It is shown that, despite the shift in time horizon and the biasing of the tests in favor of the neoclassical approach, the Post Keynesian approach still shows a much tighter fit to the historical facts.

Suggested Citation

  • John Harvey, 2005. "Post Keynesian versus Neoclassical Explanations of Exchange Rate Movements: A Short Look at the Long Run," Working Papers 200501, Texas Christian University, Department of Economics.
    • Handle: RePEc:tcu:wpaper:200501
    as

    Download full text from publisher

    File URL: http://www.econ.tcu.edu/RePEc/tcu/wpaper/wp05-01.pdf
    File Function: First version, 2005
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. John T. Cuddington & Hong Liang, 1998. "Re-examining the Purchasing Power Parity Hypothesis Over Two centuries," International Trade 9802004, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Basil Oberholzer, 2021. "Managing commodity booms: Dutch disease and economic performance," PSL Quarterly Review, Economia civile, vol. 74(299), pages 307-323.
    2. Francisco A. Martínez-Hernández, 2017. "The Political Economy of Real Exchange Rate Behavior: Theory and Empirical Evidence for Developed and Developing Countries, 1960–2010," Review of Political Economy, Taylor & Francis Journals, vol. 29(4), pages 566-596, October.
    3. Imad Moosa & Kelly Burns, 2014. "Error correction modelling and dynamic specifications as a conduit to outperforming the random walk in exchange rate forecasting," Applied Economics, Taylor & Francis Journals, vol. 46(25), pages 3107-3118, September.
    4. Sajid Ali, 2016. "How does Interest rate effect Exchange rate of Pakistan. Evidence of ARDL Bound Testing Approach," Journal of Finance and Economics Research, Geist Science, Iqra University, Faculty of Business Administration, vol. 1(2), pages 119-133, October.
    5. Moosa, Imad A. & Vaz, John J., 2016. "Cointegration, error correction and exchange rate forecasting," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 44(C), pages 21-34.
    6. Annina Kaltenbrunner, 2018. "Financialised internationalisation and structural hierarchies: a mixed-method study of exchange rate determination in emerging economies," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 42(5), pages 1315-1341.
    7. Alfredo Castillo Polanco & Ted P. Schmidt, 2011. "Exchange Rate Regimes and the Impact of the Global Crisis on Emerging Economies," Chapters, in: Joëlle Leclaire & Tae-Hee Jo & Jane Knodell (ed.), Heterodox Analysis of Financial Crisis and Reform, chapter 12, Edward Elgar Publishing.
    8. Joëlle Leclaire & Tae-Hee Jo & Jane Knodell (ed.), 2011. "Heterodox Analysis of Financial Crisis and Reform," Books, Edward Elgar Publishing, number 13978.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. John T. Harvey, 2006. "Post Keynesian versus neoclassical explanations of exchange rate movements: a short look at the long run," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 28(2), pages 161-179, January.
    2. Cuddington, John T. & Liang, Hong, 2000. "Purchasing power parity over two centuries?," Journal of International Money and Finance, Elsevier, vol. 19(5), pages 753-757, October.

    More about this item

    Keywords

    exchange rates; Post Keynesian; Neoclassical; long run;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tcu:wpaper:200501. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John Harvey (email available below). General contact details of provider: https://edirc.repec.org/data/detcuus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.