Currency Bands, Target Zones, And Cash Limits: Thresholds For Monetary And Fiscal Policy
AbstractExchange rate behavior is analyzed in the context of a stochastic rational expectations model in which there are random shocks to the price setting mechanism and in which the authorities choose to impose either nominal or real exchange rate bands. Results are compared to those that emerge from a simple monetary model subject to velocity shocks. The effects of a realignment of the band, and of fiscal policy used in conjunction with monetary policy to defend the band, are also examined.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 90/6.
Date of creation: 01 Feb 1990
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Other versions of this item:
- Miller, Marcus & Weller, Paul, 1990. "Currency Bonds, Target Zones and Cash Limits: Thresholds for Monetary and Fiscal Policy," CEPR Discussion Papers 382, C.E.P.R. Discussion Papers.
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- Antoine Magnier, 1992. "Théorie des zones cibles et fonctionnement du SME," Économie et Prévision, Programme National Persée, vol. 104(3), pages 87-113.
- Patrick Artus, 1992. "Passage à l'union économique et monétaire en Europe : effets sur la croissance et les politiques budgétaires," Économie et Prévision, Programme National Persée, vol. 106(5), pages 123-137.
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