A Consumption-Based Approach to Exchange Rate Predictability

Borradores de Economia
Número: 
857
Publicado: 
Clasificación JEL: 
C5, F31, F47, G15
Palabras clave: 
Exchange Rates, Out-of-sample, Predictability, Asset Pricing

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This paper provides evidence of short-run predictability for the real exchange rate by performing out-of-sample tests of a forecasting equation which is derived from a consumption-based asset pricing model. In this model, the real exchange rate is predict