Exchange Rate Target Zones and Policy Uncertainty：Heterogeneous Expectation on the Trend

• Main Authors: Jyun-Siang Li, 李鈞翔
• Other Authors: Ching-Chong Lai
• Format: Others
• Language: zh-TW
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/vp44cf

碩士 === 國立中山大學 === 經濟學研究所 === 102 === This thesis discusses how the public’s expectations of the exchange rate affect the stabilizing performance of the target zone. The model developed in this thesis is based on Krugman (1988) (1991), Flood and Garber (1991), Froot and Obstfeld (1991a; 1991b), and Bertola and Caballero (1992). In departing from these existing studies, our model introduces the public’s heterogeneous expectations on the random disturbance of money demand. With this feature, we find that whether the “honeymoon effect” of exchange-rate target zones is valid depends crucially upon the relative size between the public’s heterogeneous expectations on the random disturbances and the policy maker''s credibility. In particular, we show that the Bertola and Caballero (1992) result is a special case of our analysis.