Change search
ReferencesLink to record
Permanent link

Direct link
The Role of Credibility for the Effects of a Change in the Exchange-Rate Policy
Institute of Economics, University of Aarhus.
Institute of Economics, University of Aarhus.
1987 (English)Report (Other academic)
Abstract [en]

This paper analyses the real and monetary effects of a shift in the exchange-rate policy in an economy where the private sector is uncertain about the true intentions of the government.

In a repeated game of incomplete information, we show that a shift towards a tight, fixed exchange-rate policy leads to a loss in output and to a deficit on the current account in the period in which the policy lacks credibility. We also show that the long interest rate is above the short interest rate, reflecting the risk that the government reneges on its announced exchange-rate target.

Place, publisher, year, edition, pages
Stockholm: IIES , 1987. , 42 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 377
National Category
URN: urn:nbn:se:su:diva-41559OAI: diva2:331172
Published in connection with a visit at the IIES.Available from: 2010-07-21 Created: 2010-07-21 Last updated: 2010-07-21

Open Access in DiVA

fulltext(5621 kB)120 downloads
File information
File name FULLTEXT01.pdfFile size 5621 kBChecksum SHA-512
Type fulltextMimetype application/pdf


Search outside of DiVA

GoogleGoogle Scholar
Total: 120 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

Total: 42 hits
ReferencesLink to record
Permanent link

Direct link