Dynamic stability under a dual exchange rate regime with neutral intervention operations |
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Affiliation: | Academic Sinica, Taipei, Taiwan;National Central University, Chung-Li, Taiwan;Fu-Jen Catholic University, Taipei, Taiwan |
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Abstract: | This paper examines the dynamic stability under dual exchange rates with neutral intervention operations. It is shown that the relationship between the stability properties and the residents' net foreign asset position depends crucially on the impact of foreign assets on the current account, and that, regardless whether the domestic economy is in a net creditor of debtor position, it is not possible for the system to have an infinite number of stable paths. |
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