Pricing-to-Market, the Interest-Rate Rule, and the Exchange Rate

20 Pages Posted: 20 Nov 2006 Last revised: 14 Sep 2010

See all articles by Maurice Obstfeld

Maurice Obstfeld

University of California, Berkeley - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Date Written: November 2006

Abstract

Even when the exchange-rate plays no expenditure-switching role, countries may wish to have flexible exchange rates in order to free the domestic interest rate as a stabilization tool. In a setting with nontraded goods, exchange-rate movements may also enhance international risk sharing.

Suggested Citation

Obstfeld, Maurice, Pricing-to-Market, the Interest-Rate Rule, and the Exchange Rate (November 2006). NBER Working Paper No. w12699. Available at SSRN: https://ssrn.com/abstract=944187

Maurice Obstfeld (Contact Author)

University of California, Berkeley - Department of Economics ( email )

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HOME PAGE: http://emlab.berkeley.edu/users/obstfeld/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

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United States

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