<p>Trying to find explanations to movements in the exchange rate is something that econo-mists have been dealing with to a great extend lately. Especially since the break down of the Bretton Wood system in the early 1970’s, when many countries introduced a floating sys-tem instead. One of the most famous and often tested models is Jeffery A. Frankel’s Real Interest Differential (RID) model from 1979.</p><p>This paper investigates which of the variables included in the model are affecting move-ments in the exchange rate for Sweden, the UK and Japan against the US dollar between January 1995 and December 2004. The variables in question are money supply, industrial production, interest rate and inflation differential. The model has purchasing power parity and uncovered interest parity as underlying theoretical assumptions, two main building blocks of open macro economics, and when combined, they can offer a relationship be-tween changes in the exchange rate and the interest rate differential.</p><p>The results show that the variable interest rate differential constitutes a significant explana-tory variable for exchange rate movements regarding all three countries included in the model. Both Sweden and the UK have also, in accordance with the RID model, the ex-pected negative sign on the coefficient. The results regarding the other variables are mixed between the countries, but it can in general be said that the model seems to be able to ex-plain movements in the exchange rate to a certain degree.</p>

Diss. Stockholm : Handelshögsk., 2003.

The objective of this paper is to develop and test a model for the monetary sector of the Egyptian economy. It explores the importance of the instruments of monetary policy and the ability of the Central Bank of Egypt to control the supply of money. The model incorporates the preferences of the public for different types of liquid financial assets and all the financial assets and liabilities of the commercial banks and monetary authorities. With respect to the demand side of the model, it explores the classical quantity theory of Fisher, Marshall and Pigon, the Keynesian and the monetarists' demand theories for money. It explores the importance of wealth, current income, permanent income, interest rates, inflation and expected inflation. The argument by Friedman, that permanent income is the appropriate scale variable, is not supported empirically with respect to developing economies. Empirical work on developing economies suggests that transitory income may be held in cash balances due to the limited availability of alternative liquid assets. Also, non-static expectations with respect to the rate of inflation does not seem to be relevant to annual models for developing economies. Empirical results indicate that the elasticity of expectation is not significantly different from unity. With respect to the supply side of the model, this paper explores the multiplier, the production function and the "residual" approaches to the determination of money supply. Whether a supply function exists or not remains an open question. Empirical evidence indicates that the relationships between money supply, free reserves and total reserves are unstable. The non-linear hypothesis and the production function approaches state essentially an equilibrium condition. Determination of money supply as a residual from the balance sheets of the banking sector is void of the essential drawbacks of the multiplier approach. The model provides estimates for borrowings, excess reserves, foreign assets and loans. The empirical results indicate that the Central Bank of Egypt lacks the ability to control the supply of money, essentially due to lack of control over government and commerical banks' borrowings. Results for the demand function indicate that monetary policy could be relatively effective in influencing the real sector. However, lack of control over money supply implies this effectiveness cannot be channeled in the right direction. It also implies that the monetary authorities cannot control inflation under the present practices. Development of the securities market seems to be imperative to control inflation.

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In the paper, the interaction between public debt and inflation including mutual impulse response will be analysed. The European sovereign debt crisis brought once again the focus on the consequences of public debt in combination with an expansive monetary policy for the development of consumer prices. Public deficits can lead to inflation if the money supply is expansive. The high level of national debt, not only in the Euro-crisis countries, and the strong increase in total assets of the European Central Bank, as a result of the unconventional monetary policy, caused fears on inflating national debt. The transmission from public debt to inflation through money supply and long-term interest rate will be shown in the paper. Based on these theoretical thoughts, the variables public debt, consumer price index, money supply m3 and long-term interest rate will be analysed within a vector error correction model estimated by Johansen approach. In the empirical part of the article, quarterly data for Germany from 1991 by 2010 are to be examined.

The purpose of this study is to apply the monetary approach to the determination of international reserve flows to major Arab oil-exporting countries. These are Iraq, Kuwait, Libya and Saudi Arabia. / Well-defined and stable demand for and supply of money functions must exist for the monetary approach to have predictive power for reserve flows. This study found that the demand for real balances in the designated countries was a stable function of real income and the rate of inflation. In examining the money supply process, the main determinants of the monetary base and hence the money supply proved to be net foreign assets and government expenditures. / This thesis extends the empirical analysis of international reserve flows by providing empirical tests of a two-area model for the small country case. Our empirical results supported the main propositions of the monetary approach to the balance of payments about the effect of the demand for and the supply of money on reserve flows. The growth in domestic price, domestic income and world money supply exerted a positive impact on the reserve flows, while the growth in world income, interest rates, money multiplier and domestic assets had negative impact. The results also supported the validity of the assumption concerning unified world goods markets.

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Thesis (Ph. D.)--University of Hawaii at Manoa, 1995. / Includes bibliographical references (leaves 143-152). / Microfiche. / ix, 152 leaves, bound ill. 29 cm

Diss. Stockholm : Handelshögsk., 2003.