Exchange Rate Target Zones in a Utility Maximizing Framework

We present a monetary model of unilateral exchange rate target zone based on microeconomic optimization principles. We endogenously derive the consumer's consumption and protfolio choices, and the demand for money balances. The standard monetary model results, like the S-shaped solution for the exchange rate and the transfer of volatility from exchange rates to nominal interest rates are also obtained.

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Year of publication:	1993
Authors:	BELESSAKOS, Elias ; LOUFIR, Rahim
Published in:	Annales d'Economie et de Statistique. - École Nationale de la Statistique et de l'Admnistration Économique (ENSAE). - 1993, 31, p. 33-50
Publisher:	École Nationale de la Statistique et de l'Admnistration Économique (ENSAE)

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Extent:	application/pdf
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005066028