Benigno, Gianluca and Benigno, Pierpaolo (2008) Exchange rate determination under interest rate rules. Journal of International Money and Finance, 27 (6). pp. 971-993. ISSN 0261-5606
Full text not available from this repository.Abstract
We propose a theory of exchange rate determination under interest rate rules in a two-country model. We first show that simple interest rate feedback rules can determine a unique and stable equilibrium without any explicit reaction to the nominal exchange rate. We characterize how the behavior of the exchange rate and of the terms of trade depends in a critical way on the monetary regime chosen, though not necessarily on monetary shocks. We give a simple account of exchange rate volatility in terms of monetary policy rules, we provide an explanation of the relation between nominal exchange rate volatility and macroeconomic variability in terms of the monetary regime adopted by monetary authorities.
| Item Type: | Article |
|---|---|
| Official URL: | http://www.elsevier.com/wps/find/homepage.cws_home |
| Additional Information: | © 2008 Elsevier B.V |
| Divisions: | Economics |
| Subjects: | H Social Sciences > HB Economic Theory |
| JEL classification: | E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy (Targets, Instruments, and Effects) F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics |
| Date Deposited: | 14 Apr 2011 15:30 |
| Last Modified: | 08 Apr 2024 02:12 |
| URI: | http://eprints.lse.ac.uk/id/eprint/35639 |
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