The "Lack" of Volatility Trade-Offs in Exchange Rate Zones with Sticky Prices

Elias D. Belessakos and Christos Giannikos
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Elias D. Belessakos: New York Life Investment Management, U.S.A.

International Journal of Business and Economics, 2002, vol. 1, issue 1, 69-78

Abstract: In target zone regimes, volatility trade-offs between the nominal exchange rate and the nominal interest rate differential depend on the underlying monetary model assumption. In an economy with price rigidities there exists no such trade-off when the exchange rate overshoots.

Keywords: exchange rate; target zones; volatility trade-offs; sticky prices; overshooting (search for similar items in EconPapers)
JEL-codes: E43 F31 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (2)

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