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  3. Journal of Economic Perspectives
  4. Fall 1992
  5. An Interpretation of Recent Research on Exchange Rate Target Zones

Journal of Economic Perspectives

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

An Interpretation of Recent Research on Exchange Rate Target Zones

  • Lars E. O. Svensson
Journal of Economic Perspectives
vol. 6, no. 4, Fall 1992
(pp. 119–144)
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Abstract

How do exchange rate bands work compared to completely fixed rates (between realignments); or, more precisely, what are the dynamics of exchange rates, interest rates, and central bank interventions within exchange rate bands? Does the difference between bands and completely fixed exchange rates matter, and if so, which of the two arrangements is best; or, more precisely, what are the tradeoffs that determine the optimal bandwidth? This article will present an interpretation of some selected recent theoretical and empirical research on exchange rate target zones, with emphasis on main ideas and results and without technical detail.

Citation

Svensson, Lars E O. 1992. "An Interpretation of Recent Research on Exchange Rate Target Zones." Journal of Economic Perspectives 6 (4): 119–144. DOI: 10.1257/jep.6.4.119

JEL Classification

  • F31 Foreign Exchange