Essays on Speculative Attacks and Exchange Rate Target Zones

Chapter Three develops a model of exchange rate fluctuations in a target zone with a crawling central parity. The goal is to explain the behavior of exchange rates in target zones when the central parity is allowed to depreciate. The setup is used to show the importance of having a coordinated monetary and exchange rate policy. In particular it is shown that if the growth rate of domestic credit exceeds the rate of crawl of the band, expectations of future reserve depletion can arise, and the exchange rate's distribution inside the target zone concentrates more of its mass in the upper half of the band. The paper also provides an explanation of why attempts to decrease speculative pressure by increasing the rate of crawl are usually unsuccessful.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Economics

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2015

Author dc:creator

• Galindo, Arturo Jose

Contributors dc:contributor

• Esfahani, Hadi S.

• Economics, General

Language dc:language

eng

Identifier

(MiAaPQ)AAI9921689

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/85645