Targeting the Exchange Rate: An Empirical Investigation

Shula Pessach and Assaf Razin

No 3662, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The purpose of this paper is to implement empirically a variant of the new theory of exchange rate targeting, suitable for high inflation small open economies. The theory formulates an expectations induced relationship between the exchange rate and the fundamental subject to random shocks and target zone constraints on rates of depreciation. The empirical analysis identifies the roles played by policy and market fundamentals in foreign exchange markets, and estimate the key parameters of the exchange rate dynamic equation.

Date: 1991-03
Note: ITI IFM
References: View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published as Review of International Economics, vol. 2, February 1994

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