INTRAMARGINAL INTERVENTIONS, BANDS AND THE PATTERNS OF EMS EXCHANGE-RATE DISTRIBUTIONS

Authors
BEETSMA RMWJ VANDERPLOEG F
Citation
Rmwj. Beetsma et F. Vanderploeg, INTRAMARGINAL INTERVENTIONS, BANDS AND THE PATTERNS OF EMS EXCHANGE-RATE DISTRIBUTIONS, International economic review, 35(3), 1994, pp. 583-602
Citations number
22
Categorie Soggetti
Economics
Journal title
International economic review → ACNP
ISSN journal
00206598
Volume
35
Issue
3
Year of publication
1994
Pages
583 - 602
Database
ISI
SICI code
0020-6598(1994)35:3<583:IIBATP>2.0.ZU;2-N
Abstract
We document an empirical puzzle for EMS exchange rates during a period in which the bands on these exchanges rates were (almost) credible, i .e. exchange mte distributions are hump-shaped rather than U-shaped as predicted by the standard target zone model. We offer an explanation of this puzzle which is based on the combination of two realistic feat ures, namely the presence of intramarginal interventions and wage/pric e sluggishness.