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Exchange rate target zones, realignments and the interest rate differential: Theory and evidence

โœ Scribed by Alejandro M. Werner


Book ID
115979744
Publisher
Elsevier Science
Year
1995
Tongue
English
Weight
908 KB
Volume
39
Category
Article
ISSN
0022-1996

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We show how agents' rational expectations regarding the state-contingent activation of policy instruments do not only impact the asset price it is designed to affect but spill over onto the entire range of asset prices in an economy. We present an application to exchange rate target zones as a state