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Author: | Beetsma, R. M. W. J. Ploeg, F. van der |
Title: | Macroeconomic stabilization and intervention policy under an exchange rate band. |
Journal: | Journal of International Money and Finance
1998 : APR, VOL. 17:2, p. 339-353 |
Index terms: | EXCHANGE RATES FOREIGN EXCHANGE MACROECONOMIC MODELS STABILIZATION STOCHASTIC PROCESSES |
Language: | eng |
Abstract: | The authors investigate macroeconomic stabilization and foreign exchange market intervention for a small open economy with a nominal exchange rate band. In a first-best situation, a band is not advisable from a stabilization perspective, even though with money demand shocks no welfare losses are incurred. With goods demand shocks, narrowing the band affects the marginal interventions, a band may be desirable. |
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