Testing the Credibility of Belgium's Exchange Rate Policy /
This paper examines the credibility of the exchange rate policy pursued by the Belgian monetary authorities of pegging the Belgian franc to a narrow fluctuation band around the deutsche mark, in the context of the exchange rate mechanism of the European Monetary System. Simple interest rate corridor...
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| Format: | Revija |
| Jezik: | English |
| Izdano: |
Washington, D.C. :
International Monetary Fund,
1993.
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| Serija: | IMF Working Papers; Working Paper ;
No. 1993/076 |
| Online dostop: | Full text available on IMF |
| Izvleček: | This paper examines the credibility of the exchange rate policy pursued by the Belgian monetary authorities of pegging the Belgian franc to a narrow fluctuation band around the deutsche mark, in the context of the exchange rate mechanism of the European Monetary System. Simple interest rate corridor analysis, based on the Belgian-German long-term interest rate differential and taking explicit account of the currency's position within its fluctuation band, would appear to suggest that the hypothesis that long-run exchange rate credibility has been attained should be rejected, even though considerable progress has been made in this regard since the early 1980s. The paper proceeds to decompose the Belgian-German interest rate differential into a sovereign credit risk and an exchange rate risk component, via the modelling of inflationary expectations, and concludes that long-run exchange rate credibility cannot be rejected from 1990 onwards. |
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| Opis knjige/članka: | <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required |
| Fizični opis: | 1 online resource (40 pages) |
| Format: | Mode of access: Internet |
| ISSN: | 1018-5941 |
| Dostop: | Electronic access restricted to authorized BRAC University faculty, staff and students |