A Portfolio Approach to the Determination of Exchange Rates Within a Multicountry Model



The Eurolink model is a system of structural econometric models of the different countries of the European Economic Community. The national models are built, maintained and operated by resident economists in each EEC country, familiar with local institutional behavioural characteristics and well informed as to the economic prospects and economic policies in their own country. The individual models vary considerably in size and specification, from about a hundred behavioural equations for the Italian model to about eight hundred for the French one, and overall they produce a system which cannot be compared with a centrally structural multinational model which has a uniform structure across countries.1


Exchange Rate Interest Rate Current Account Monetary Authority Spot Rate 
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© Paul De Grauwe and Theo Peeters 1983

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