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- Title
EXOGENEITY IN A RECENT EXCHANGE RATE MODEL: A REPLY.
- Authors
MACDONALD, RONALD; RICCI, LUCA ANTONIO
- Abstract
In this note we show that the real exchange rate was indeed weakly exogenous in some of the specifications in MacDonald and Ricci (2004), but argue this was in all likelihood a function of the relatively limited degrees of freedom. We demonstrate here that by increasing the degrees of freedom, we can satisfy the weak exogeneity condition, whilst at the same time producing equilibrium estimates of the Rand which are quantitatively and qualitatively the same as those reported in MacDonald and Ricci (2004).
- Subjects
FOREIGN exchange rates; DEGREES of freedom; MONETARY policy; EXOGENEITY (Econometrics); ECONOMIC equilibrium
- Publication
South African Journal of Economics, 2005, Vol 73, Issue 4, p747
- ISSN
0038-2280
- Publication type
Article
- DOI
10.1111/j.1813-6982.2005.00051.x