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Broome, Simon J. (2005) Limited Reserves and the Optimal Width of an Exchange Rate Target Zone. Open Economies Review, 16 (3). pp. 263-281. ISSN 0923-7992
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Abstract
This paper analyses the stabilising properties of an exchange rate target zone when the stock of
available reserves is limited. In these circumstances it is reasonable to suppose that the optimal
bandwidth is affected by the expected lifetime of the zone. Our analysis uses Sutherland’s (1995)
target zone model to assess the importance of the expected lifetime in determining the optimal width
of the zone. We find that the expected lifetime tends to widen the optimal bandwidth considerably
but unless the stock of initial reserves
| Item Type: | Article |
|---|---|
| Keywords: | stabilisation policy; exchange rate crises; optimal target zones; |
| Academic Unit: | Faculty of Social Sciences > Economics, Finance and Accounting |
| Item ID: | 20949 |
| Identification Number: | 10.1007/s11079-005-1025-z |
| Depositing User: | Dr Simon Broome |
| Date Deposited: | 18 Dec 2025 14:02 |
| Journal or Publication Title: | Open Economies Review |
| Publisher: | Springer Verlag |
| Refereed: | Yes |
| Related URLs: | |
| Use Licence: | This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available here |
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