Realignment Expectations, Forward Rate Bias, and Sterilized Intervention in an Adjustable Peg Exchange Rate Model with Policy Optimization »
Series: IMF Working Papers
Author(s): Peter Isard
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 February 1994
Keywords: foreign exchange, exchange rate, exchange rates, rational expectations, foreign exchange reserves
The paper models an adjustable peg exchange rate arrangement as a policy rule with an escape clause under which the timing and magnitudes of realignments are the outcomes of policy optimization decisions. Under the...