Incorporation of Fixed-Flexible Exchange Rates in Econometric Trade Models: A Grafted Polynomial Approach

Zong-Shin Liu, S. Devadoss, William H. Meyers
July 1986  [86-WP 6]

Endogenizing the exchange rat in trade models over the period of fixed and flexible exchange rate systems poses an econometric problem in the estimation because of the fixity of the exchange rate under the fixed exchange rate system. An econometric technique, the grafted polynomial approach, is used to solve this problem.

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