Target zones and international policy coordination : The contrast between the necessary and sufficient conditions for success
AbstractThis paper distinguishes between some obvious necessary and sufficient conditions for adopting the target zone proposal as a means of improving macroeconomic performance. The necessary conditions may be satisfied fairly easily, but it is a good deal more difficult to design a targeting system that satisfies the sufficient conditions when the exchange rate is used as an intermediate target. On that criterion the gains may be smaller than previously estimated. Target Zones do, however, have important practical advantages. They are effective in promoting stability. They are also a simple but relatively uncontroversial way to secure the coordination necessary to stop policymakers from adopting inefficient or undesirably competitive polici.
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Bibliographic InfoArticle provided by Elsevier in its journal European Economic Review.
Volume (Year): 36 (1992)
Issue (Month): 4 (May)
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Web page: http://www.elsevier.com/locate/eer
Other versions of this item:
- Hughes Hallett, Andrew, 1990. "Target Zones and International Policy Coordination: The Contrast Between the Necessary and Sufficient Conditions for Success," CEPR Discussion Papers 393, C.E.P.R. Discussion Papers.
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- Douven, R.C.M.H. & Engwerda, J.C., 1995.
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Open Access publications from Tilburg University
urn:nbn:nl:ui:12-153486, Tilburg University.
- Creel, Jerome & Capoen, Fabrice & Cussy, Pascal & Lenoble-Liaud, Helene, 2003. "How to manage financial shocks: Intra-European vs. international monetary coordination," Journal of Macroeconomics, Elsevier, vol. 25(4), pages 431-455, December.
- Douven, R. C. & Plasmans, J. E. J., 1996. "SLIM, a small linear interdependent model of eight EU-member states, the USA and Japan," Economic Modelling, Elsevier, vol. 13(2), pages 185-233, April.
- A.J. Hallet, 1998. "When Do Target Zones Work? An Examination of Exchange Rate Targeting as a Device for Coordinating Economic Policies," Open Economies Review, Springer, vol. 9(2), pages 115-138, April.
- Andrew Hallett & Nicola Viegi, 2002. "Inflation Targeting as a Coordination Device," Open Economies Review, Springer, vol. 13(4), pages 341-362, October.
- Hughes Hallett, Andrew & Richter, Christian, 2004. "Estimating an equilibrium exchange rate for the dollar and other key currencies," Economic Modelling, Elsevier, vol. 21(6), pages 1117-1144, December.
- Peter Mooslechner & Martin Schuerz, 1999. "International Macroeconomic Policy Coordination: Any Lessons for EMU? A Selective Survey of the Literature," Empirica, Springer, vol. 26(3), pages 171-199, September.
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