The paper investigates the relationships between domestic and foreign price levels and the exchange rate and other macro-variables. The results indicate that exchange rate, foreign rate of inflation and domestic credit drive the rate of inflation with no feedback effects. What are the policy...

The cointegration revolution has had a substantial impact on applied analysis. The methods for conducting this analysis are sketched out, reminding the reader of the ideas underlying them and giving sufficient background for empirical work. The treatment can be used as a textbook for courses on...