This paper derives a reduced-form expression for an interestrate in an open economy by incorporating after tax covered interest parity conditions into a simple neo-classical macro model. The result clearly demonstrates that the relationship between an interest rate and variables used to explain...

This paper demonstrates that different rates of taxation on interest income and exchange gains may bias results of hypothesis testing regarding critical aspects of exchange rate behavior. Two problems are discussed specifically. First, it is shown that omission of tax considerations may bias...

This note attempts to reconcile contradictory findings regarding the impact of money surprises on short term interest rates. Expectations effects regarding anticipated monetary policy and anticipated inflation suggest a positive relationship. Liquidity and output effects of monetary surprises...

This paper critically examines a number of maintained hypotheses that are necessarily being tested along with the basic notion derived from the rational expectations (RE) formulation of Lucas (1972) (19 73) that "only unanticipated money matters." The trend stationary representation of secular...