Devaluation Expectations: The Swedish Krona 1982-1991

Hans Lindberg, Lars Svensson and Paul Söderlind

No 3918, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Devaluation expectations for the Swedish krona are estimated for the period 1982-1991 with several methods. First the "simplest test" is applied under either only the minimal assumption of "no positive minimum profit" or the additional assumption of uncovered interest parity. Then a more precise method suggested by Bertola and Svensson is used, in which expected rates of depreciation within the exchange rate band, estimated in several ways, are subtracted from interest rate differentials. In addition the probability density of the time of devaluations is estimated. Finally, estimated devaluation expectations are to some extent explained by a few macrovariables and parliament elections.

Date: 1991-11
Note: ITI IFM
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Citations: View citations in EconPapers (11)

Published as Economic Journal. vol. 103, pp. 1170-1179, (1993)

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Working Paper: Devaluation Expectations: the Swedish Krona 1982-1991 (1991)
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