The burden of intervention: externalities in multilateral exchange rates arrangements

• 成果类型: Article
• 署名作者: Flandreau, M
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/S0022-1996(97)00020-2
• 发表日期: 1998
• 页码: 137-171
• 关键词: TARGET ZONES; central bank interventions; key-currency regimes

摘要

In this paper, we consider a multilateral target zone model that generalizes Krugman's model of a bilateral target zone. Parities are defended by manipulating money supplies in participating countries. This means that interventions aimed at one given exchange rate influence other exchange rates as well. As a result of these externalities shocks on each fundamental affect the whole range of exchange rates involved. Moreover, intra-marginal interventions arise endogenously, and the exchange rate distribution does not exhibit the u-shaped pattern which is typical of traditional target zones. Instead, our model gives rise to intra-marginal targets to which exchange rates tend to return. The location of these targets is shown to depend on the intervention-sterilization mix adopted by monetary authorities. (C) 1998 Elsevier Science B.V.