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Exchange Rate Targets and Currency Bands


  • Krugman,Paul
  • Miller,Marcus


Research programmes in economics usually emerge from the intersection between a new analytical approach and a real economic problem. In the last few years, such a programme has emerged in international monetary economics, which is underpinned by a theoretical framework grounded in stochastic calculus and the increasing prominence in the real world of the international monetary arrangements under which national monetary authorities attempt to keep exchange rates within bands or 'target zones'. This new programme of research also covers switches in exchange rate regimes. This volume from the Centre for economic Policy Research and the National Bureau of Economic Research includes contributions - as authors or discussants - from most of the active participants in the development of this new field, and will serve as a useful introduction and basic text for this new research programme. It opens with an account of the basic economic model of a currency band developed by Paul Krugman, which is followed by two papers that extend this approach. Other chapters study the regime switches entailed in Britain's return to the gold standard in 1925 and the preannounced entry of a floating currency into a band such as the EMS. Essays on sustainability and realignment consider the possible outcomes of speculative attacks on such bands, and the volume ends with a paper on econometric testing of models of this type.

Suggested Citation

  • Krugman,Paul & Miller,Marcus (ed.), 1992. "Exchange Rate Targets and Currency Bands," Cambridge Books, Cambridge University Press, number 9780521435260, May.
  • Handle: RePEc:cup:cbooks:9780521435260

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    References listed on IDEAS

    1. Prebisch, Raúl, 1950. "The economic development of Latin America and its principal problems," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 29973, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    2. Justin Yifu Lin, 2011. "New Structural Economics: A Framework for Rethinking Development," World Bank Research Observer, World Bank Group, vol. 26(2), pages 193-221, August.
    3. Justin Yifu Lin, 2012. "New Structural Economics : A Framework for Rethinking Development and Policy," World Bank Publications, The World Bank, number 2232.
    4. Lin, Justin Yifu, 2003. "Development Strategy, Viability, and Economic Convergence," Economic Development and Cultural Change, University of Chicago Press, vol. 51(2), pages 276-308, January.
    5. Dirk Willem te Velde & Justin Lin & Célestin Monga & Suresh D. Tendulkar & Alice Amsden & K. Y. Amoako & Howard Pack & Wonhyuk Lim, 2011. "DPR Debate: Growth Identification and Facilitation: The Role of the State in the Dynamics of Structural Change," Development Policy Review, Overseas Development Institute, vol. 29(3), pages 259-310, May.
    6. Lin, Justin Yifu, 1992. "Rural Reforms and Agricultural Growth in China," American Economic Review, American Economic Association, vol. 82(1), pages 34-51, March.
    7. Gene M. Grossman & Elhanan Helpman, 1996. "Electoral Competition and Special Interest Politics," Review of Economic Studies, Oxford University Press, vol. 63(2), pages 265-286.
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    Cited by:

    1. Barry Eichengreen., 1993. "International Monetary Arrangements for the 21st Century," Center for International and Development Economics Research (CIDER) Working Papers C93-021, University of California at Berkeley.
    2. Peter Carr & Zura Kakushadze, 2015. "FX Options in Target Zone," Papers 1512.01527,, revised Jul 2016.
    3. Velayoudom Marimoutou & Éric Girardin, 1994. "Problèmes d'évaluation de la crédibilité d'une zone cible de change," Revue Économique, Programme National Persée, vol. 45(3), pages 501-514.
    4. Phillips, Peter C.B., 2016. "Modeling speculative bubbles with diverse investor expectations," Research in Economics, Elsevier, vol. 70(3), pages 375-387.
    5. Ichiro Gombi, 2003. "Multiple Market Intervention for Target Zones," The Japanese Economic Review, Japanese Economic Association, vol. 54(1), pages 74-85.

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