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.
Year of publication: |
1993
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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
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Publisher: |
École Nationale de la Statistique et de l'Admnistration Économique (ENSAE) |
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