Verifiability and the Vanishing Intermediate Exchange Rate Regime

The corners hypothesis holds that intermediate exchange rate regimes arevanishing, or should. Surprisingly for a new conventional wisdom, this hypothesis so farlacks analytic foundations. In part, the generalization is overdone. We nevertheless offerone possible theoretical rationale, a contribution to the list of arguments againstintermediate regimes: a lack of verifiability, needed for credibility. Central banksannounce intermediate targets such as exchange rates, so that the public can...