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Implicit bands in the Spanish peseta/Deutschmark exchange rate, 1965-1998

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  • Francisco Ledesma-Rodriguez
  • Manuel Navarro-Ibanez
  • Jorge Perez-Rodriguez
  • Simon Sosvilla-Rivero

Abstract

The objective of this article is to identify implicit bands for the Spanish peseta/Deutschmark exchange rate. To this end, based on the 'natural' classification approach suggested by Reinhart and Rogoff (2004), we propose a statistical test to assess the statistical significance of the outcome of their classifying algorithm. The test is applied to the period 1965-1998, indicating our results existence of fluctuation bands in the 1980s and 1990s, before and after the entry of the peseta into the European Monetary System.

Suggested Citation

  • Francisco Ledesma-Rodriguez & Manuel Navarro-Ibanez & Jorge Perez-Rodriguez & Simon Sosvilla-Rivero, 2007. "Implicit bands in the Spanish peseta/Deutschmark exchange rate, 1965-1998," Applied Financial Economics, Taylor & Francis Journals, vol. 17(11), pages 921-932.
  • Handle: RePEc:taf:apfiec:v:17:y:2007:i:11:p:921-932
    DOI: 10.1080/09603100600843916
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    References listed on IDEAS

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    1. Francesco Caselli & Silvana Tenreyro, 2006. "Is Poland the Next Spain?," NBER Chapters, in: NBER International Seminar on Macroeconomics 2004, pages 459-533, National Bureau of Economic Research, Inc.
    2. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 379-408.
    3. Carmen M. Reinhart & Kenneth S. Rogoff, 2004. "The Modern History of Exchange Rate Arrangements: A Reinterpretation," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 1-48.
    4. Jonathan David Ostry & Anne Marie Gulde & Atish R. Ghosh & Holger C. Wolf, 1995. "Does the Nominal Exchange Rate Regime Matter?," IMF Working Papers 1995/121, International Monetary Fund.
    5. Coudert, Virginie & Dubert, Marc, 2005. "Does exchange rate regime explain differences in economic results for Asian countries?," Journal of Asian Economics, Elsevier, vol. 16(5), pages 874-895, October.
    6. Carmen M. Reinhart, 2000. "The Mirage of Floating Exchange Rates," Annual Proceedings, The Association for the Study of the Cuban Economy, vol. 10.
    7. Helene Poirson Ward, 2001. "How Do Countries Choose their Exchange Rate Regime?," IMF Working Papers 01/46, International Monetary Fund.
    8. Ashok Bhundia & Mark R. Stone, 2004. "A New Taxonomy of Monetary Regimes," IMF Working Papers 04/191, International Monetary Fund.
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    Cited by:

    1. Morales-Zumaquero, Amalia & Sosvilla-Rivero, Simon, 2010. "Structural breaks in volatility: Evidence for the OECD and non-OECD real exchange rates," Journal of International Money and Finance, Elsevier, vol. 29(1), pages 139-168, February.

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