A Guide to Target Zones
AbstractThis paper identifies key issues surrounding the advisability and practicality of adopting "target zones" for the exchange rates of major currencies. Pour fundamental questions concerning the definition of and the rationale for target zones are addressed: first, what is generally meant by a "target zone" approach to exchange rate management and how can "hard" and "soft" versions of this approach be defined; second, what are the perceived deficiencies in the existing exchange rate system of managed floating which motivate the call for the adoption of target zones; third, how might target zones remedy these deficiencies; and fourth, what factors are behind much of the skepticism over and opposition to target zones? In addition, the paper deals with a series of operational questions of a more technical nature that weigh heavily on the practicality of implementing a target zone approach. The issues discussed include the following: how would the target zones be calculated; what currencies would be included in the system of target zones; how wide should the target zones be and how frequently should they be revised; and what policy instruments would be employed to keep actual exchange rates within the target zones, and with what consequences for other policy objectives? The purpose of the paper is not to make the case either for or against the adoption of target zones. Rather, the intention is to raise and discuss factors that should be considered in any serious discussion of the topic.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2113.
Date of creation: Aug 1987
Date of revision:
Note: ITI IFM
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Michael Funke & Yu-Fu Chen & Nicole Glanemann, 2011.
"The Signalling Channel of Central Bank Interventions: Modelling the Yen / US Dollar Exchange Rate,"
Quantitative Macroeconomics Working Papers
21110, Hamburg University, Department of Economics.
- Yu-Fu Chen & Michael Funke & Nicole Glanemann, 2011. "The Signalling Channel of Central Bank Interventions: Modelling the Yen / US Dollar Exchange Rate," CESifo Working Paper Series 3610, CESifo Group Munich.
- Yu-Fu Chen & Michael Funke & Nicole Glanemann, 2011. "The Signalling Channel of Central Bank Interventions: Modelling the Yen/US Dollar Exchange Rate," Dundee Discussion Papers in Economics 260, Economic Studies, University of Dundee.
- Chen, Yu-Fu & Funke, Michael & Glanemann, Nicole, 2011. "The Signalling Channel of Central Bank Interventions: Modelling the Yen/US Dollar Exchange Rate," SIRE Discussion Papers 2011-66, Scottish Institute for Research in Economics (SIRE).
- Giannellis, Nikolaos & Papadopoulos, Athanasios P., 2011.
"What causes exchange rate volatility? Evidence from selected EMU members and candidates for EMU membership countries,"
Journal of International Money and Finance,
Elsevier, vol. 30(1), pages 39-61, February.
- Nikolaos Giannellis & Athanasios Papadopoulos, 2009. "What causes exchange rate volatility? Evidence from selected EMU members and candidates for EMU membership countries," Working Papers 1004, University of Crete, Department of Economics, revised 08 Jan 2010.
- Dominquez, Kathryn M. & Kenen, Peter B., 1992.
"Intramarginal intervention in the EMS and the target-zone model of exchange-rate behavior,"
European Economic Review,
Elsevier, vol. 36(8), pages 1523-1532, December.
- Kathryn M. Dominguez & Peter B. Kenen, 1993. "Intramarginal Intervention in the EMS and the Target-Zone Model of Exchange-Rate Behavior," NBER Working Papers 3670, National Bureau of Economic Research, Inc.
- Forbes, C.S. & Kofman, P., 2000. "Bayesian Soft Target Zones," Monash Econometrics and Business Statistics Working Papers 4/00, Monash University, Department of Econometrics and Business Statistics.
If references are entirely missing, you can add them using this form.