The Linkage Between Speculative Attack And Target Zone Models Of Exchange Rates
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The Linkage Between Speculative Attack and Target Zone Models of Exchange Rates
Author | : International Monetary Fund |
Publsiher | : International Monetary Fund |
Total Pages | : 24 |
Release | : 1989-04-06 |
Genre | : Business & Economics |
ISBN | : 9781451980189 |
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In this paper we generalize the target zone exchange rate as model formalized by Krugman (1988b). The main contributions of these pages consist of linking the recent developments in the theory of target zones to the mirror image theory of speculative attacks on asset price fixing regimes and in using aspects of that linkage to give an intuitive interpretation to the “smooth pasting” condition often invoked as a terminal condition. We aim to unify these two literatures by showing that the solution concepts in both are identical.
Soft Exchange Rate Bands and Speculative Attacks
Author | : Mr.Alessandro Prati,Mr.Leonardo Bartolini |
Publsiher | : International Monetary Fund |
Total Pages | : 30 |
Release | : 1998-11-01 |
Genre | : Business & Economics |
ISBN | : 9781451857375 |
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We present a model of a “soft” exchange rate target zone and interpret it as a stylized description of the post-August 1993 ERM. Our central bank targets a moving average of the current and past exchange rates, rather than the exchange rate’s current level, thus allowing the rate to move within wide margins in the short run, but within narrow margins in the long run. For realistic parameters, soft target zones are significantly less vulnerable to speculative attacks than “hard” target zones. These predictions are consistent with the ERM’s experience and the abatement of speculative pressure in European markets since the bands’ widening in 1993.
Exchange Rate Economics
Author | : Ronald MacDonald |
Publsiher | : Taylor & Francis |
Total Pages | : 465 |
Release | : 2007-03-12 |
Genre | : Business & Economics |
ISBN | : 9781134801268 |
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First published in 2007. Exchange Rate Economics: Theories and Evidence is the second edition of Floating Exchange Rates: Theories and Evidence, and builds on the successful content and structure of the previous edition, but has been comprehensively updated and expanded to include additional literature on the determination of both fixed and floating exchange rates. Core topics covered include: • the purchasing power parity hypothesis and the PPP puzzle; • the monetary and portfolio-balance approaches to exchange rates; • the new open economy macroeconomics approach to exchange rates; and • the determination of exchange rates in target zone models and speculative attack models. Exchange Rate Economics: Theories and Evidence also includes extensive discussion of recent econometric work on exchange rates with a particular focus on equilibrium exchange rates and measuring exchange rate misalignment, as well as discussion on the non-fundamentals-based approaches to exchange rate behaviour, such as the market microstructure approach. The book will appeal to academics and postgraduate students with an interest in all aspects of international finance and will also be of interest to practitioners concerned with issues relating to equilibrium exchange rates and the forecastability of currencies in terms of macroeconomic fundamentals.
Speculative Attacks and Models of Balance of Payments Crises
Author | : Mr.Robert P. Flood,Pierre-Richard Agénor,Jagdeep S. Bhandari |
Publsiher | : International Monetary Fund |
Total Pages | : 64 |
Release | : 1991-10-01 |
Genre | : Business & Economics |
ISBN | : 9781451852189 |
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This paper reviews recent developments in the theoretical and empirical analysis of balance-of-payments crises. A simple analytical model highlighting the process leading to such crises is first developed. The basic framework is then extended to deal with a variety of issues, such as: alternative post-collapse regimes, uncertainty, real sector effects, external borrowing and capital controls, imperfect asset substitutability, sticky prices, and endogenous policy switches. Empirical evidence on the collapse of exchange rate regimes is also examined, and the major implications of the analysis for macroeconomic policy discussed.
Speculative Bubbles Speculative Attacks and Policy Switching
Author | : Robert P. Flood,Peter M. Garber |
Publsiher | : MIT Press |
Total Pages | : 528 |
Release | : 1994 |
Genre | : Business & Economics |
ISBN | : 0262061694 |
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The papers in this book are grouped into three sections: the first on price bubbles is primarily financial; the second on speculative attacks (on exchange rate regimes) is international in scope; and the third, on policy switching, is concerned with monetary policy.
Soft Exchange Rate Bands and Speculative Attacks
![Soft Exchange Rate Bands and Speculative Attacks](https://youbookinc.com/wp-content/uploads/2024/06/cover.jpg)
Author | : Leonardo Bartolini |
Publsiher | : Unknown |
Total Pages | : 39 |
Release | : 2006 |
Genre | : Electronic Book |
ISBN | : OCLC:1291214599 |
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We present a model of a quot;softquot; exchange rate target zone and interpret it as a stylized description of the post-August 1993 ERM. Our central bank targets a moving average of the current and past exchange rates, rather than the exchange rate's current level, thus allowing the rate to move within wide margins in the short run, but within narrow margins in the long run. For realistic parameters, soft target zones are significantly less vulnerable to speculative attacks than quot;hardquot; target zones. These predictions are consistent with the ERM's experience and the abatement of speculative pressure in European markets since the bands' widening in 1993.
Target Zones and Forward Rates in a Model with Repeated Realignments
Author | : Mr.Leonardo Bartolini,Mr.Gordon M. Bodnar |
Publsiher | : International Monetary Fund |
Total Pages | : 54 |
Release | : 1992-03-01 |
Genre | : Business & Economics |
ISBN | : 9781451921199 |
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This paper studies the implications of the imperfect credibility of an exchange rate target zone on the term structure of forward premia. The relationship between spot and forward exchange rates of different maturities reflects the possibility of repeated realignments of the exchange rate band. The credibility of the commitment to the target zone implicit in forward market data can be extracted by estimating the model. Application to French/German data indicates that the model is capable of matching observed patterns of interest rate differentials during the EMS, while yielding estimates of the credibility parameters that accord with the experience of the FF/DM exchange rate during the 1980s.
An Empirical Exploration of Exchange Rate Target Zones
Author | : Mr.Robert P. Flood,Andrew Rose,Mr.Donald J. Mathieson |
Publsiher | : Unknown |
Total Pages | : 106 |
Release | : 1991-02 |
Genre | : Business & Economics |
ISBN | : UCSD:31822006408496 |
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In the context of a flexible-price monetary exchange rate model and the assumption of uncovered interest parity, we obtain a measure of the fundamental determinant of exchange rates. Daily data for the European Monetary System are used to explore the importance of nonlinearities in the relationship between the exchange rates and fundamentals. Many implications of existing “target-zone” exchange rate models are tested; little support is found for existing nonlinear models of limited exchange rate flexibility.