TY - JOUR
T1 - Targeting the Exchange Rate Under Inflation
AU - Pessach, Shula
AU - Razin, Assaf
PY - 1994/2
Y1 - 1994/2
N2 - The purpose of this paper is to implement empirically a variant of the new theory of exchange‐rate targeting, suitable for high‐inflation, small, open economies. We formulate an expectations‐induced relationship between the exchange rate and the fundamental, subject to random shocks and target‐zone constraints on rates of depreciation. the empirical analysis provides estimates for the key parameters of the exchange‐rate dynamic equation, and thereby identifies the unique roles played by policy variables and market fundamentals in foreign‐exchange markets.
AB - The purpose of this paper is to implement empirically a variant of the new theory of exchange‐rate targeting, suitable for high‐inflation, small, open economies. We formulate an expectations‐induced relationship between the exchange rate and the fundamental, subject to random shocks and target‐zone constraints on rates of depreciation. the empirical analysis provides estimates for the key parameters of the exchange‐rate dynamic equation, and thereby identifies the unique roles played by policy variables and market fundamentals in foreign‐exchange markets.
UR - http://www.scopus.com/inward/record.url?scp=84982701550&partnerID=8YFLogxK
U2 - 10.1111/j.1467-9396.1994.tb00026.x
DO - 10.1111/j.1467-9396.1994.tb00026.x
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AN - SCOPUS:84982701550
SN - 0965-7576
VL - 2
SP - 40
EP - 49
JO - Review of International Economics
JF - Review of International Economics
IS - 1
ER -