DP398 Target Zones and Realignments
| Author(s): | Giuseppe Bertola, Ricardo Caballero |
| Publication Date: | March 1990 |
| Keyword(s): | EMS, Exchange Rates Volatility, Expected Depreciation, Interventions |
| JEL(s): | 431, 432 |
| Programme Areas: | International Macroeconomics |
| Link to this Page: | cepr.org/active/publications/discussion_papers/dp.php?dpno=398 |
Recent contribution emphasize that the presence of exchange rate target zones has important effects on the within-band behaviour of exchange rates. We show that the implications of available models are strikingly inconsistent with European Monetary System data, and we propose a model of recurring realignments the predictions of which are consistent with the evidence.