Pricing-to-Market, the Interest-Rate Rule, and the Exchange Rate

Prepared for the conference in honor of Guillermo A. Calvo, International Monetary Fund, April 15-16, 2004. I thank Ricardo Caballero, Mathias Hoffmann, and conference participants for helpful comments. This paper will appear as a chapter in a festschrift in Calvo's honor, to be edited by Carmen Reinhart, Carlos Vegh, and Andreas Velasco (MIT Press, 2007). The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.