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The Credibility of Nordic Exchange Rate Bands: 1987-1991

Author

Listed:
  • Mr. Sami Geadah
  • Mr. Lars E. O. Svensson
  • Mr. Tapio Saavalainen

Abstract

The credibility of the exchange rate bands in the Nordic countries during 1987-91 is examined with two tests. The results suggest that the credibility of Finland’s exchange rate band within a twelve-month horizon could not be rejected except in the fall of 1991; however, the band lacked credibility within a five-year horizon throughout the period. Denmark’s and Norway’s bands lacked both short- and long-term credibility at the beginning of the period, but credibility could not be rejected from 1989 for Norway and as of 1990 for Denmark. The credibility of Sweden’s band within a one-year horizon could not be rejected up to fall 1989, but thereafter its credibility deteriorated sharply.

Suggested Citation

  • Mr. Sami Geadah & Mr. Lars E. O. Svensson & Mr. Tapio Saavalainen, 1992. "The Credibility of Nordic Exchange Rate Bands: 1987-1991," IMF Working Papers 1992/003, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1992/003
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=752
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    Cited by:

    1. Lehmussaari, Olli-Pekka & Suvanto, Antti & Vajanne, Laura, 1992. "The currency band and credibility: The Finnish experience," Bank of Finland Research Discussion Papers 37/1992, Bank of Finland.

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