The theory of monetary approach to exchange rate determination is empirically tested for TL/US$ and TL/DM exchange rates in Turkey. The stationarity properties of the variables are analyzed and the bi variate cointegrating relationship between exchange rate and relative money supply is investigated in the empirical estimation of the monetary approach in single reduced form equations. The theory is also formulated in a VAR system, in levels, and the multivariate cointegrating relationships are examined to highlight the long-run interactions among the variables. Single equation estimations of the model do not provide support for the monetary approach but cointegrating vectors found by Johansen multicointegrating procedure indicate same long-run relationship between the variables of the monetary approach
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