Dallas S. Batten and R. W. Hafer assess the empirical validity of the “currency substitution” hypothesis for five major industrial countries. This argument challenges the notion that flexible exchange rates insulate a domestic economy from foreign monetary shocks. In particular, if two currencies are considered to be substitutes in demand, then foreign monetary shocks will be transmitted across nations, even under a flexible exchange rate regime. Because these foreign monetary shocks are hypothesized to be transmitted through the domestic demand for money, Batten and Hafer examine the effects of changes in the opportunity cost of holding foreign-currency-denominated money balances on a standard specification of the domestic demand for money equation to test for the impact of currency substitution. The evidence indicates that currency substitution’s impact generally is statistically insignificant and of no economic importance. Consequently, the authors conclude that currency substitution does not appear to jeopardize the insulating properties of a flexible exchange rate system. Michael T. Belongia applies a basic model of asset pricing to farmland in an attempt to determine the major factors explaining the ups and downs of land prices. In his “Factors Behind the Rise and Fall of Farmland Prices: A Preliminary Assessment,” Belongia shows that expected future inflation, expected future net returns to farming and the ex-ante real interest rate explain much of the variation in the growth of farmland prices through their 1981 peak. To test the model’s validity in explaining the more recent behavior of farmland prices, an out-of-sample simulation experiment was performed for the 1982-85 period. The result of this exercise indicates that the model does poorly in explaining the recent decline in land prices, raising some doubt about the model’s validity in times of sharp land price declines. The author argues that this poor performance in explaining recent land price movements is more likely related to difficulties in measuring unobservable expectations than to weaknesses in the economic model.