| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 5055752 | Economic Modelling | 2007 | 10 Pages |
Abstract
In this paper, the effectiveness of an interest rate defense policy is investigated theoretically. Chen [Chen, Shiu-Sheng, 2006. Revisiting the interest rate-exchange rate nexus: a Markov switching approach. Journal of Development Economics 79 (1), 208-224] has documented an empirical regularity that higher interest rates are associated with higher exchange rate volatility. In order to account for the empirical findings, a simple theoretical model by incorporating interest rate rules in a noise trader model is proposed.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Shiu-Sheng Chen,