tive demand for forward exchange. Estimation of the MT equation is reasonable only under the maintained hypothesis that at least one of the parameters (a<, /3) is finite. In conclusion, let us turn to the other case mentioned by Kohlhagen, namely, estimation of (1) when (a) prevails but real rates are not equalized. In this case one can use the middle expression of (3) to eliminate St+3e from (1), obtaining