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

Patrick Minford; Michael Brech; Kent Matthews

doi:10.1016/0014-2921(80)90018-5

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

Patrick Minford, Michael Brech, Kent Matthews

Research output: Journal Publication › Article › peer-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 language	English
Pages (from-to)	189-219
Number of pages	31
Journal	European Economic Review
Volume	14
Issue number	2
DOIs	https://doi.org/10.1016/0014-2921(80)90018-5
Publication status	Published - 1980
Externally published	Yes

ASJC Scopus subject areas

Finance
Economics and Econometrics

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10.1016/0014-2921(80)90018-5

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title = "A rational expectations model of the U.K. under floating exchange rates",

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.",

author = "Patrick Minford and Michael Brech and Kent Matthews",

note = "Funding Information: This work was supported by INSERM and by grants from Agence Nationale de Recherche sur le SIDA (ANRS) and Ensemble Contre le SIDA (ECS). G. H. was the recipient of a France–Algeria Cooperation fellowship (CNOUS) and a Sidaction fellowship from ECS. I. A. was the recipient of an ANRS fellowship. Y. B. is supported by the Minist{\`e}re de l{\textquoteright}Enseignement Sup{\'e}rieur et de la Recherche and D. C. was the recipient of a Sidaction fellowship from ECS. We thank all our colleagues of U372 for carefully reading the manuscript.",

year = "1980",

doi = "10.1016/0014-2921(80)90018-5",

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journal = "European Economic Review",

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AU - Brech, Michael

AU - Matthews, Kent

N1 - Funding Information: This work was supported by INSERM and by grants from Agence Nationale de Recherche sur le SIDA (ANRS) and Ensemble Contre le SIDA (ECS). G. H. was the recipient of a France–Algeria Cooperation fellowship (CNOUS) and a Sidaction fellowship from ECS. I. A. was the recipient of an ANRS fellowship. Y. B. is supported by the Ministère de l’Enseignement Supérieur et de la Recherche and D. C. was the recipient of a Sidaction fellowship from ECS. We thank all our colleagues of U372 for carefully reading the manuscript.

PY - 1980

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N2 - 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.

AB - 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.

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DO - 10.1016/0014-2921(80)90018-5

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SP - 189

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JO - European Economic Review

JF - European Economic Review

IS - 2

ER -

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

Abstract

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