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Entering an Preannounced Currency Band

Author

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  • Ichikawa, Masaki
  • Miller, Marcus
  • Sutherland, Alan

Abstract

Krugman (1988) provides a stationary characterisation of an exchange rate inside a currency band. Here we derive the non-stationary solution for a floating exchange rate which applies when currency dealers expect such a band to be imposed at a known future date.

Suggested Citation

  • Ichikawa, Masaki & Miller, Marcus & Sutherland, Alan, 1990. "Entering an Preannounced Currency Band," Economic Research Papers 268382, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:268382
    DOI: 10.22004/ag.econ.268382
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    References listed on IDEAS

    as
    1. Smith, Gregor W & Smith, R Todd, 1990. "Stochastic Process Switching and the Return to Gold, 1925," Economic Journal, Royal Economic Society, vol. 100(399), pages 164-175, March.
    2. Paul R. Krugman, 1988. "Target Zones and Exchange Rate Dynamics," NBER Working Papers 2481, National Bureau of Economic Research, Inc.
    3. Froot, Kenneth A. & Obstfeld, Maurice, 1991. "Exchange-rate dynamics under stochastic regime shifts : A unified approach," Journal of International Economics, Elsevier, vol. 31(3-4), pages 203-229, November.
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    Cited by:

    1. Ikeda, Shinsuke & Shibata, Akihisa, 1995. "Fundamentals uncertainty, bubbles, and exchange rate dynamics," Journal of International Economics, Elsevier, vol. 38(3-4), pages 199-222, May.

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