Target Zones and Realignments

Giuseppe Bertola and Ricardo Caballero ()

No 398, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Recent contribution emphasize that the presence of exchange rate target zones has important effects on the within-band behaviour of exchange rates. We show that the implications of available models are strikingly inconsistent with European Monetary System data, and we propose a model of recurring realignments the predictions of which are consistent with the evidence.

Keywords: EMS; Exchange Rates Volatility; Expected Depreciation; Interventions (search for similar items in EconPapers)
Date: 1990-03
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Journal Article: Target Zones and Realignments (1992)
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