Pricing-to-Market, the Interest-Rate Rule, and the Exchange Rate

Maurice Obstfeld

No 12699, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Even when the exchange-rate plays no expenditure-switching role, countries may wish to have flexible exchange rates in order to free the domestic interest rate as a stabilization tool. In a setting with nontraded goods, exchange-rate movements may also enhance international risk sharing.

JEL-codes: F41 F42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-mic and nep-mon
Date: 2006-11
Note: IFM ITI
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