Evidence suggests that developing countries are more concerned with stabilizing the nominal exchange rate than developed countries. Some papers show not only that nominal exchange rates are less volatile, but also that international reserves and domestic interest rates are significantly more...

Central banks behave purposefully when they set monetary policy, basing their decisions upon the data that is available and upon their understanding of the economy. At the same time, policy decisions affect economic outcomes, and the likelihood of observing a given state of the world. This paper...