Corrado, Luisa; Miller, Marcus; Zhang, Lei - C.E.P.R. Discussion Papers - 2002
. While there is a random walk near equilibrium, for real exchange rates some distance from equilibrium there is mean-reversion … which increases with the degree of misalignment. An interesting question is whether this non-linear mean-reversion might be … develop a theoretical model of such a monitoring band to see whether it can generate patterns of non-linear mean-reversion …