NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Devaluation Expectations: The Swedish Krona 1982-1991

Hans Lindberg, Lars E.O. Svensson, Paul Soderlind

NBER Working Paper No. 3918
Issued in November 1991
NBER Program(s):ITI, IFM

Devaluation expectations for the Swedish krona are estimated for the period 1982-1991 with several methods. First the "simplest test" is applied under either only the minimal assumption of "no positive minimum profit" or the additional assumption of uncovered interest parity. Then a more precise method suggested by Bertola and Svensson is used, in which expected rates of depreciation within the exchange rate band, estimated in several ways, are subtracted from interest rate differentials. In addition the probability density of the time of devaluations is estimated. Finally, estimated devaluation expectations are to some extent explained by a few macrovariables and parliament elections.

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Document Object Identifier (DOI): 10.3386/w3918

Published: Economic Journal. vol. 103, pp. 1170-1179, (1993)

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