Abstract
Short-run and long-run relationships between Swiss francs per dollar and economic determinants are determined, namely money supply or growth in money supply, interest rates, differences in inflation rates, deviations from purchasing power parity and trade balances. A long-run relationship is estimated by using the Phillips–Hansen methodology while a short-run error correction model is estimated by performing non-parametric corrections for endogeneity and serial correlation. The predictions from the estimated error correction model outperform random-walk model for the period January 1989 to June 1990.
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