Should we teach exchange rate theories?

Should we teach exchange rate theories? Order Description Guidelines for Exchange-rate Paper • The power of persuasion stems from subordinating the arguments to the question at hand. • The question is not whether there is some redeemable feature of some model. • The question is whether exchange-rate modeling should be taught. • To teach or not to teach – that is the question To teach • How relevant is the failure of X-rate models for an education? Why is it that you are here? • Is prediction the only, or main, criterion for assessing a theory? • Suppose you argue no. • Then, – Are we going to lower the theory-adequacy “bar”? – So teach me anything because I do not care about predictive accuracy? – Why should a student take comfort in learning that there is a formulation that explains the past well but cannot predict the future? – Would the future not become the past? Would the model be able to explain the upcoming past? Not to Teach • How relevant is the failure of X-rate models for an economics education? Why is it that you are here? • Is prediction the only, or main, criterion for assessing a theory? • Suppose answer is yes. – Then what is so unique about exchange-rate modeling that deserves to be expunged while preserving other theories? – Are we going to ditch all the IR courses, HecksherOhlin & Co., perfect competition? – Where do we draw the line? At the alphabet? – Should we then treat the exchange-rate as given the same way we treat government purchases as given?