Chang, Roberto (contributor); Velasco, Andrés (contributor) - 2004
that E
�
u(
�
C)
�
− E
n
u(
�
C)
o
> 0 if B<0 or
B>2E{X}. Assuming that either condition holds, �xed exchange rates are
an …
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>E
�
U
�x
�
also.
We conclude that for two broadly used classes of preferences, the regime with
�exible exchange rates …_velasco@harvard.edu
1
1Introduction
Emerging market countries have trouble letting their exchange rates �oat, and
many countries that claim …