The Credibility of the Venezuela Crawling-Band System

Revista de Economía del Rosario, Vol. 9, No. 2, December 2006

13 Pages Posted: 18 Jan 2007

See all articles by María Isabel Campos

María Isabel Campos

University of Valladolid - Faculty of Economic Science and Business Studies

José L. Torres

University of Malaga

Esmeralda Villegas

Universidad del Zulia

Abstract

This paper studies the credibility of the Venezuela crawling-band exchange rate regime during the period July, 1996 - February, 2002. We show that, introducing some modifications, the credibility analysis widely applied to target zone regimes can also be used in studying the credibility of crawling-band regimes. In analyzing the credibility of the Venezuela crawling band, first we use the so-called simple credibility tests developed by Svensson (1991).

Additionally, we estimate the expected rate of realignment using the drift-adjustment method. Both the credibility tests and the drift-adjustment method give similar results, showing that the crawling-band system was highly credible during the period.

Keywords: Crawling-band exchange rate system, Credibility, Realignments

JEL Classification: F31, F33

Suggested Citation

Campos, María Isabel and Torres, José L. and Villegas, Esmeralda, The Credibility of the Venezuela Crawling-Band System. Revista de Economía del Rosario, Vol. 9, No. 2, December 2006, Available at SSRN: https://ssrn.com/abstract=957344

María Isabel Campos (Contact Author)

University of Valladolid - Faculty of Economic Science and Business Studies ( email )

Avenida Valle Esgueva, 6
Valladolid
Spain

José L. Torres

University of Malaga ( email )

Malaga, Málaga 29004
Spain

Esmeralda Villegas

Universidad del Zulia ( email )

Av 16
Maracaibo, Zulia 4015
Venezuela

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