NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
loading...

Risk Neutrality and the Two-Tier Foreign Exchange Market: Evidence from Belgium

Robert Flood, Nancy Marion

NBER Working Paper No. 3015
Issued in June 1989
NBER Program(s):The International Trade and Investment Program, The International Finance and Macroeconomics Program

Most of the literature on two-tier exchange markets is built around models in which domestic policy can exert a powerful influence on the spread between the current account exchange rate and the capital account exchange rate. We show that if optimizing agents are risk neutral, domestic policy has no significant influence on the spread. Our work with Belgian data suggests that a nsk neutral specification for Belgian residents acting in the two-tier market is hard to reject, and we also find evidence that domestic variables do not affect the Belgian spread.

download in pdf format
   (232 K)

download in djvu format
   (163 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w3015

Users who downloaded this paper also downloaded* these:
Bordo, Choudhri, and Schwartz w1480 Money Growth Variability and Money Supply Interdependence Under InterestRate Control: Some Evidence For Canada
Krueger w2904 Asymmetries in Policy Between Exportables and Import-Competing Goods
Slemrod w4008 Do Taxes Matter? Lessons From the 1980s
Bernheim w2257 Social Security Benefits: An Empirical Study of Expectations and Realizations
Kotchen and Grant w14429 Does Daylight Saving Time Save Energy? Evidence from a Natural Experiment in Indiana
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

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

Contact Us