Targeting the Exchange Rate: Empirical Investigation

International Monetary Fund

No 1990/061, IMF Working Papers from International Monetary Fund

Abstract: The purpose of this paper is to implement empirically the new theory of exchange rate targeting. The theory formulates an expectations induced relationship between the exchange rate and the fundamental subject to random shocks and target zone constraints. By using monthly data for a representative small-open economy (Israel in the 1980s) the empirical analysis identifies the special roled played by policy and market fundamentals in the behavior of the exchange rate.

Keywords: WP; rate of depreciation; target zone exchange rate theory; managed exchange-rate regime; managed depreciation rate; exchange rate fluctuation; exchange rate depreciation; Exchange rates; Depreciation; Demand for money; Exchange rate policy; Exchange rate arrangements (search for similar items in EconPapers)
Pages: 34
Date: 1990-01-01
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1990/061

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