The volatility of interest rates is relevant for many financial applications. Under realistic assumptions the term structure of interest rate differentials provides an important prediction of the term structure of interest rates. This paper derives the term structure of differentials in a...

The process of international interest rate convergence for arbitrary terms (represented by the term structure of interest rate differentials) is derived in a model of a small open economy which faces a purely time-contingent exchange rate regime switch from flexible to fixed rates. Special...

In this paper we propose a generalisation of the noise trader transmission mechanism to examine the impact of central bank intervention on exchange rates. Within a heterogeneous expectations exchange rate model intervention operations are supposed to provide support to either chartist or...

The coordination channel has been proposed as a means by which foreign exchange market intervention may be effective, in addition to the traditional portfolio balance and signaling channels. If strong and persistent misalignments of the exchange rate are caused by non-fundamental influences,...

Etwas Erstaunliches ist geschehen. Otmar Issing, renommierter Chefvolkswirt (und zugleich Direktoriumsmitglied) der Europäischen Zentralbank (EZB), hat jüngst (auf einer Konferenz in Zürich) mit einem Ausflug in die Wechselkurspolitik ein Tabu gebrochen, dessen geldpolitische Unantastbarkeit...