An Interpretation of Recent Research on Exchange Rate Target Zones | Zendy

Lars E.O. Svensson | Zendy

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An Interpretation of Recent Research on Exchange Rate Target Zones

Author(s) -

Lars E.O. Svensson

Publication year - 1992

Publication title -

the journal of economic perspectives

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 9.614

H-Index - 196

eISSN - 1944-7965

pISSN - 0895-3309

DOI - 10.1257/jep.6.4.119

Subject(s) - exchange rate , interpretation (philosophy) , economics , work (physics) , fixed exchange rates , macroeconomics , computer science , physics , thermodynamics , programming language

How do exchange rate bands work compared to completely fixed rates (between realignments); or, more precisely, what are the dynamics of exchange rates, interest rates, and central bank interventions within exchange rate bands? Does the difference between bands and completely fixed exchange rates matter, and if so, which of the two arrangements is best; or, more precisely, what are the tradeoffs that determine the optimal bandwidth? This article will present an interpretation of some selected recent theoretical and empirical research on exchange rate target zones, with emphasis on main ideas and results and without technical detail.

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