NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

How Long do Unilateral Target Zones Last?

Bernard Dumas, Lars E.O. Svensson

NBER Working Paper No. 3931 (Also Reprint No. r1915)
Issued in December 1991
NBER Program(s):   ITI   IFM

We examine the expected survival time of a unilateral exchange rate target zone, when constraints on monetary policy prevent the central bank from exclusively focusing on defending the target zone. Generally, the width of the target zone has a negligible effect on the expected survival time, and the dominant determinants are reserve levels and the degree of real and monetary divergence between the country in question and the rest of the world. For seemingly realistic parameters, the expected survival time is fairly long: a few decades rather than a few years.

download in pdf format
   (168 K)

download in djvu format
   (121 K)

email paper

This paper is available as PDF (168 K) or DjVu (121 K) (Download viewer) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w3931

Published: Journal of International Economics, 36 (1994) pp. 467-481 citation courtesy of

Users who downloaded this paper also downloaded these:
Svensson w4207 Why Exchange Rate Bands? Monetary Independence in Spite of Fixed Exchange Rates
Svensson w4871 Estimating and Interpreting Forward Interest Rates: Sweden 1992 - 1994
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us