An Interest Rate Defense of a Fixed Exchange Rate? (Electronic book text)


This paper is about the possibility of an active interest-rate defense in the Krugman-Flood-Garber (KFG) model of speculative attacks.2 It is straightforward to see that this requires a departure from uncovered interest parity (UIP), which was a basic KFG building block. UIP implies that the domestic-currency interest rate is the passive reflection of devaluation expectations. There is, therefore, no room for active interest rate policy.

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This paper is about the possibility of an active interest-rate defense in the Krugman-Flood-Garber (KFG) model of speculative attacks.2 It is straightforward to see that this requires a departure from uncovered interest parity (UIP), which was a basic KFG building block. UIP implies that the domestic-currency interest rate is the passive reflection of devaluation expectations. There is, therefore, no room for active interest rate policy.

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Not Avail

Country of origin

United States

Release date

October 2000

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Format

Electronic book text

Pages

20

ISBN-13

978-6613797971

Barcode

9786613797971

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LSN

6613797979



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