A rational expectations model of the U.K. under floating exchange rates

Patrick Minford, Michael Brech, Kent Matthews

Research output: Journal PublicationArticlepeer-review

5 Citations (Scopus)

Abstract

This paper constructs a model of an open economy with both trade and capital flows. Private sector wealth holders are assumed to be concerned with balance sheet ratios as in a portfolio choice theoretic model. Rational expectations in the strict Muth sense is introduced via the asset allocation decision by the private sector. International trade and capital flows are treated as in the monetary theory of the balance of payments. The model is constructed for the U.K. economy and simulation and forecasting exercises are conducted for the floating period.

Original languageEnglish
Pages (from-to)189-219
Number of pages31
JournalEuropean Economic Review
Volume14
Issue number2
DOIs
Publication statusPublished - 1980
Externally publishedYes

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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