haku: @author Sussman, O. / yhteensä: 5
viite: 2 / 5
| Tekijä: | Guembel, A. Sussman, O. |
| Otsikko: | Optimal exchange rates: a market microstructure approach |
| Lehti: | Journal of the European Economic Association
2004 : DEC, VOL. 2:6, p. 1242-1274 |
| Asiasana: | exchange rates market structure |
| Kieli: | eng |
| Tiivistelmä: | Motivated by the observation that exchange-rate management resembles market-making, microstructure theory is used to conduct a welfare analysis of exchange-rate management, including the "corner solutions" of a free float and a fixed peg. It is shown that a policy that smoothes out exchange-rate fluctuations needs to trade off the welfare gain due to lower risk exposure of local producers against the trading losses that the policy would generate due to speculation. The conditions under which exchange-rate management can increase welfare are identified and it is argued that these conditions are more likely to be satisfied in illiquid markets, mainly small economies and emerging markets. |
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