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
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: Suggested Citation
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