The monetary approach to long run exchange rate determination is reexamined for the Canadian — US dollar exchange rate. We first test for non‐stationarity, and then conduct a multivariate cointegration analysis to examine the validity of the monetary model in determination of exchange rates over the long run. Our results uphold the validity of the monetary approach.
Dutt, S.D. and Ghosh, D. (1998), "AN EMPIRICAL EXAMINATION OF THE LONG RUN MONETARY (EXCHANGE RATE) MODEL", Studies in Economics and Finance, Vol. 19 No. 1/2, pp. 62-83. https://doi.org/10.1108/eb028753
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