Conclusions

This dissertation has examined two dimensions of foreign exchange

and a one month forward rate was performed. Two methods were used to

sion of spot rates on lagged one month forward rates, corrected for the

one month forward rate. This method allows us to incorporate knowledge of

estimation of the model. The empirical specification of the model enables

in studying economic dynamics; Thomas Sargent has usefully employed these

procedures in analyzing the term structure of interest rates (Sargent 1979),

mation of dynamic labor demand schedules (Sargent 1978a and Hansen and

Sargent 1979), and the theory of the consumption function (Sargent 1978b).