Change search
ReferencesLink to record
Permanent link

Direct link
Why Exchange Rate Bands?: Monetary Independence in Spite of Fixed Exchange Rates
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
1992 (English)Report (Other academic)
Abstract [en]

The paper argues that the reason world fixed exchange rate regimes usually have finite bands instead of completely fixed exchange rates between realignments is that exchange rate bands, counter to the textbook result, give central banks some monetary independence, even with free international capital mobility. The nature and amount of monetary independence is specified, informally and in a formal model, and quantified with Swedish krona data. Altogether the amount of monetary independence appears sizeable. For instance, an increase in the Swedish krona band from zero to about ±2 percent may reduce krona interest rate's standard deviation by about 1/2.

Place, publisher, year, edition, pages
Stockholm: IIES , 1992. , 57 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 521
Keyword [en]
target zones, interest rates, monetary policy, mean reversion
National Category
URN: urn:nbn:se:su:diva-41839OAI: diva2:337935
Available from: 2010-08-10 Created: 2010-08-10 Last updated: 2010-08-10Bibliographically approved

Open Access in DiVA

fulltext(8918 kB)204 downloads
File information
File name FULLTEXT01.pdfFile size 8918 kBChecksum SHA-512
Type fulltextMimetype application/pdf

Search in DiVA

By author/editor
Svensson, Lars E.O.
By organisation
Institute for International Economic Studies

Search outside of DiVA

GoogleGoogle Scholar
Total: 204 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: 31 hits
ReferencesLink to record
Permanent link

Direct link