Intramarginal interventions, bands and the pattern of EMS exchange rate distributions

Authors
Publication date 1994
Journal International Economic Review
Volume | Issue number 35 | 3
Pages (from-to) 583-602
Organisations
  • Faculty of Economics and Business (FEB) - Amsterdam School of Economics Research Institute (ASE-RI)
Abstract The authors document an empirical puzzle for European Monetary System exchange rates during a period in which the bands on these exchanges rates were (almost) credible, i.e., exchange rate distributions are hump-shaped rather than U-shaped as predicted by the standard target zone model. The authors offer an explanation of this puzzle that is based on the combination of two realistic features, namely the presence of intramarginal interventions and wage/price sluggishness.
Document type Article
Published at https://doi.org/10.2307/2527075
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