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Are exchange rate bands better than fixed exchange rates? The imported credibility approach

Coles, M and Philippopoulos, A (1997) 'Are exchange rate bands better than fixed exchange rates? The imported credibility approach.' Journal of International Economics, 43 (1-2). 133 - 153. ISSN 0022-1996

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Abstract

This paper explicitly incorporates exchange rate bands into the Barro-Gordon model of inflation. This is a non-trivial extension. Focusing on Markov-perfect equilibria, we specify the properties of the optimal policy functions, exchange rate dynamics and hence the arguments for and against target zones. The attractiveness of alternative exchange rate regimes (i.e. fixed, flexible and target zones) and the position of exchange rates inside the band depend on the inflationary performance of the center country.

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 05 Jan 2013 16:32
Last Modified: 30 Apr 2018 10:15
URI: http://repository.essex.ac.uk/id/eprint/4914

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