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How Long do Unilateral Target Zones Last?
Wharton School of the University of Pennsylvania.
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
1991 (English)Report (Other academic)
Abstract [en]

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 survivial time is fairly long: a few decades rather than a few years.

Place, publisher, year, edition, pages
Stockholm: IIES , 1991. , 19 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 509
Keyword [en]
exchange rates, interventions, reserves
National Category
URN: urn:nbn:se:su:diva-41820OAI: diva2:337829
Available from: 2010-08-09 Created: 2010-08-09 Last updated: 2010-08-09Bibliographically approved

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Svensson, Lars E.O.
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