Reserves and the managed float: a search for the essentials |
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Authors: | Guillermo A. Calvo |
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Affiliation: | Department of Economics, Columbia University, New York, NY 10027, USA |
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Abstract: | We examine the stability of rules that determine the rate of devaluation as a function of the level of reserves; the analysis is conducted in terms of an overlapping-generations and a Sidrauski-type model with rational expectations and without capital mobility. On the whole, the analysis confirms results by Rodriguez (1981) in a substantially different model, by which ‘high’ speeds of adjustment tend to provoke instability. |
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