This paper re-examines the validity of the monetary exchange rate model during the post-Bretton Woods era for 18 OECD countries. Our analysis simultaneously considers the presence of both cross-sectional dependence and multiple structural breaks, which have not received much attention in...

We document that the net factor income smoothing channel in OECD countries is primarily driven by net financial asset income, while the other two sub[hyphen (true graphic)]components (net compensation of employees and net taxes on imports) turn out to be ineffective. Once factor income inflows...