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Currency Bands, Target Zones, and Cash Limits: Thresholds for Monetary and Fiscal Policy
Author:
Mr. Marcus Miller null

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Mr. Paul Weller null

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Series:
IMF Working Papers
Volume/Issue:
Volume 1990: Issue 006
Language:
English
Publication Date:
01 Feb 1990
DOI:
https://doi.org/10.5089/9781451928853.001
ISBN:
9781451928853
ISSN:
1018-5941
Pages:
42
Keywords:
WP; currency band; price level; monetary policy; money stock; cash limit; exchange rate commitment; full employment; commitments of the EMS; Exchange rates; Currencies; Managed exchange rates; Monetary base; Real exchange rates; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Exchange rate behavior is analyzed in the context of a stochastic rational expectations model in which there are random shocks to the price setting mechanism and in which the authorities choose to impose either nominal or real exchange rate bands. Results are compared to those which emerge from a simple monetary model subject to velocity shocks. The effects of a realignment of the Band, and of fiscal policy used in conjunction with monetary policy to defend the band, are also examined.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund