EXCHANGE-RATE TARGET ZONES, REALIGNMENTS AND THE INTEREST-RATE DIFFERENTIAL - THEORY AND EVIDENCE

• 成果类型: Article
• 署名作者: WERNER, AM
• 署名单位: Yale University
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/0022-1996(95)01380-8
• 发表日期: 1995
• 页码: 353-367
• 关键词: Exchange rates; Interest rates; target zones

摘要

This paper develops a target zone model for the exchange rate where the expected realignment is an increasing function of the distance of the exchange rate from the central parity, as a percentage of the width of the band. In this framework, the interest rate differential increases with the deviation of the exchange rate from the central parity when the exchange rate is close to the central parity, and it decreases when the exchange rate is close to the edges of the band. Finally, the paper looks at the evidence from the EMS, and finds partial support for the implications of the model.