This chapter uses very long time series of historical data to investigate the cross-country convergence of real and nominal short-term and long-term interest rates across exchange-rate regimes. Consistent with theory, the behavior of nominal interest rates varies considerably across regimes,...

Using Canadian-U.S. dollar data this paper examines the question of whether recent positive findings with regard to purchasing power parity carry over to the monetary approach to exchange rates. The evidence provides strong support for the long-run monetary model of exchange rates. At the same...