Zhao, Huimin; Gong, Fuzhou; Peng, Fangping; Liu, Qin - In: International Journal of Financial Research 5 (2014) 1, pp. 29-41
The objective of this paper is to show quantitative results for the exchange rate target zones in a small open economy. We develop a stochastic model for exchange rates under the equilibrium in goods and money markets based on a variation of Dornbusch (1976)'s model, incorporating several kinds...