A copy of this work was available on the public web and has been preserved in the Wayback Machine. The capture dates from 2022; you can also visit the original URL.
The file type is
AB This paper examines the behavior of real interest rates in exchange-rate based stabilization programs. The analysis is based on a model with imperfect capital mobility and optimizing agents. A permanent reduction in the devaluation rate is first shown to have an ambiguous effect on real interest rates on impact. The analysis is then extended to consider a stabilization program characterized by an initial reduction in the rate of devaluation of the nominal exchange rate, and the announcementdoi:10.1017/s0951007900003132 fatcat:4e6n5b3jbnfm7hepkcdvsrbnde