The role of a fixed exchange rate system when central bankers are independent

Article Abstract:

A study of exchange rate systems for countries with independent central bankers indicates that if the bankers are selected cooperatively, flexible and fixed exchange rates are likely to be equivalent, but if selection is non-cooperative, fixed exchange rates are the likely outcome, due to the conservative nature of central bankers. Independence implies lack of shared social preferences with the countries of those bankers, and the case considered is of totally sym,etric countries, in the same position.

EXECUTIVE, LEGISLATIVE, AND GENERAL, Economic aspects, Central banks

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EMS exchange rate bands: a Monte Carlo investigation of three target zone models

Article Abstract:

Three target zone models for reproducing stylized facts of weekly deutsche mark exchange rates in the European Monetary System (EMS) from Jan. 1987 to Aug. 1992 were compared using Monte Carlo analysis. The potential impact of the presence of currency bands in the EMS is investigated by comparing the results of tests against the unit root hypothesis, non-normality and conditional heteroskedacity with the test results for dollar exchange rates against EMS currencies.

Research, European Monetary System, Mark (Germany)

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