The rational expectation hypothesis is widely used in finance and macroeconomics. A natural research question comprises investigating whether models that use this hypothesis can fit the data well. Researchers have been developing econometric procedures to test rational expectation models....

Assessing real effective exchange rate equilibrium is a challenging task. There is no consensus in the literature on which methodologies and norms apply best to tackle real effective exchange rate misalignment estimation. The novelty of our paper consists of showing that different methodologies...

This paper aims to test the current account approach. Four variants of the model are analyzed. The first variant consists of the traditional model due to Sachs [SACHS, J. (1982): "The Current Account in the Macroeconomic Adjustment Process," Scandinavian Journal of Economics, 84, 147-159.].The...

The debate on “exchange wars and trade wars” is raising the attention of experts on international trade and economics. The main purpose of this paper is to analyze the impacts of exchange rate misalignments on one of the most traditional trade policy instruments – tariffs, as defined by...

Recent works for mature markets on covered interest parity suggest that deviations are mean reverting but persistent particularly after 2008 crisis. (Du et al. (2018)) Our study aims to contribute to the literature by modelling the deviations from covered interest rate parity (CIP) of an...

The seminal study of Meese and Rogoff (1983) on exchange rate forecastability had a great impact on the international finance literature. The authors showed that exchange rate forecasts based on structural models are worse than a naive random walk. This result is known as the Meese-Rogoff (MR)...