Sensitivity of Simulation Results to Competing SAM Updates
From the classical gold standard up to the current ERM2 arrangement of the European Union, target zones have been a widely used exchange regime in contemporary history. This paper presents a benchmark model that rationalizes the choice of target zones over the rest of regimes: the fixed rate, the free float and the managed float. It is shown that the monetary authority may gain efficiency by reducing volatility of both the exchange rate and the interest rate at the same time. Furthermore, the model is consistent with some known stylized facts in the empirical literature that previous models were not able to generate, namely, the positive relation between the exchange rate and the interest rate differential, the degree of non-linearity of the function linking the exchange rate to fundamentals and the shape of the exchange rate stochastic distribution.
|Date of creation:||Dec 2002|
|Date of revision:|
|Contact details of provider:|| Postal: Ramon Trias Fargas, 25-27, 08005 Barcelona|
Phone: +34 93 542-1222
Fax: +34 93 542-1223
Web page: http://www.barcelonagse.eu
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Charles L. Ballard & Don Fullerton & John B. Shoven & John Whalley, 1985. "Introduction to "A General Equilibrium Model for Tax Policy Evaluation"," NBER Chapters, in: A General Equilibrium Model for Tax Policy Evaluation, pages 1-5 National Bureau of Economic Research, Inc.
- Charles L. Ballard & Don Fullerton & John B. Shoven & John Whalley, 1985.
"A General Equilibrium Model for Tax Policy Evaluation,"
National Bureau of Economic Research, Inc, number ball85-1, May.
- Ballard, Charles L. & Fullerton, Don & Shoven, John B. & Whalley, John, 2009. "A General Equilibrium Model for Tax Policy Evaluation," National Bureau of Economic Research Books, University of Chicago Press, edition 0, number 9780226036335.
- Golan, Amos & Judge, George & Robinson, Sherman, 1994. "Recovering Information from Incomplete or Partial Multisectoral Economic Data," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 541-49, August.
- Robinson, Sherman & Cattaneo, Andrea & El-Said, Moataz, 2000.
"Updating and estimating a Social Accounting Matrix using cross entropy methods,"
TMD discussion papers
58, International Food Policy Research Institute (IFPRI).
- Sherman Robinson & Andrea Cattaneo & Moataz El-Said, 2001. "Updating and Estimating a Social Accounting Matrix Using Cross Entropy Methods," Economic Systems Research, Taylor & Francis Journals, vol. 13(1), pages 47-64.
- McDougall, Robert, 1999. "Entropy Theory and RAS are Friends," GTAP Working Papers 300, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
- N/A, 1985. "General Policy," India Quarterly: A Journal of International Affairs, Indian Council of World Affairs, vol. 41(1), pages 74-79.
- N/A, 1985. "General Policy," India Quarterly: A Journal of International Affairs, Indian Council of World Affairs, vol. 41(1), pages 112-117.
- Robinson, Sherman & Cattaneo, Andrea & El-Said, Moataz, 1998. "Estimating a social accounting matrix using cross entropy methods:," TMD discussion papers 33, International Food Policy Research Institute (IFPRI).
- Kehoe, Timothy J. & Whalley, John, 1985. "Uniqueness of equilibrium in large-scale numerical general equilibrium models," Journal of Public Economics, Elsevier, vol. 28(2), pages 247-254, November.
When requesting a correction, please mention this item's handle: RePEc:bge:wpaper:88. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bruno Guallar)
If references are entirely missing, you can add them using this form.