Targeting the Exchange Rate: An Empirical Investigation

34 Pages Posted: 15 Feb 2006

See all articles by Shula Pessach

Shula Pessach

National Bureau of Economic Research (NBER)

Assaf Razin

Tel Aviv University - Eitan Berglas School of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

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Date Written: July 1990

Abstract

The purpose of this paper is to implement empirically the new theory of exchange rate targeting. The theory formulates an expectations induced relationship between the exchange rate and the fundamental subject to random shocks and target zone constraints. By using monthly data for a representative small-open economy (Israel in the 1980s) the empirical analysis identifies the special roled played by policy and market fundamentals in the behavior of the exchange rate.

JEL Classification: 132, 431

Suggested Citation

Pessach, Shula and Razin, Assaf, Targeting the Exchange Rate: An Empirical Investigation (July 1990). IMF Working Paper No. 90/61, Available at SSRN: https://ssrn.com/abstract=884887

Shula Pessach (Contact Author)

National Bureau of Economic Research (NBER)

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Assaf Razin

Tel Aviv University - Eitan Berglas School of Economics ( email )

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Ramat Aviv, Tel Aviv, 69978
Israel
+972 3 640 7303 (Phone)
+972 3 640 9908 (Fax)

National Bureau of Economic Research (NBER) ( email )

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United States

CESifo (Center for Economic Studies and Ifo Institute)

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Germany

HOME PAGE: http://www.CESifo.de

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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