THE DETERMINATION OF THE COSTA RICA COLON/USD EXCHANGE RATE

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Yu Hsing (2009)
  • Journal: The International Journal of Business and Finance Research, volume 3, issue 1, pages 79-87
  • Subject:
    • jel: jel:F31

The purpose of this paper is to compare four major exchange rate models for the Costa Rica Colon. We examine exchange rate data for the Costa Rica/U.S. dollar relationship from 1981-2007 and find that monetary models have a higher explanatory ability whereas the Mundell-Fleming model performs better in forecasting exchange rates than other models. The coefficient of the interest rate differential in the uncovered interest parity model has a wrong sign.
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