Target zones in History and Theory: efficiency, credibility and policy autonomy

Marc Flandreau and John Komlos

Working Papers from HAL

Abstract: A natural experiment with an exchange-rate band in Austria-Hungary in the early 20th century provides a rare opportunity to discuss critical aspects of the theory of target zones. Providing a new derivation of the target zone model as a set of nested hypotheses, the inference is drawn that policy credibility and market efficiency were paramount in the success of the Austro-Hungarian experience.

Keywords: target zone; market efficiency; monetary policy; covered interest parity (search for similar items in EconPapers)
Date: 2005-08
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-01065605
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