ABSTRACT
In previous chapters we have discussed various asset views of the determ ination of the exchange rate. In this chapter, attempts by researchers to implement and empirically test such views in a reduced-form manner are considered.1 To keep the size of the chapter manageable, only reduced-form evidence which purports to explain the ex post actual exchange rate as a function of ex post actual asset stocks and other variables for the 1970s and 1980s experience with floating exchange rates will be considered.2 References to empirical studies of the asset approach for the interwar period will mainly be relegated to footnotes. Reduced-form exchange rate equations which seek to explain the ex post unanticipated exchange rate using new information are considered in C hapter 12.
