Hurley, Margaret J.
(1998)
The scope for monetary independence in exchange rate target zones
broad and narrow.
Economics Letters, 59.
pp. 97-105.
ISSN 0165-1765
Abstract
Placing limits on the movement of economic fundamentals in order to maintain an exchange rate within a target zone also
puts a target zone around interest rate differentials. The bandwidth of exchange rate and interest rate differentials target
zones will be different except at one point; it is suggested that this point gives a useful partitioning of target zones into broad
and narrow categories. For realistic parameter values, this occurs at an exchange rate target zone of plus or minus 3.2%.
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