Fixing soft margins
January 1993
Article
pp 359-374.
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Non-parametric tolerance limits are employed to calculate soft margins such as advocated in Williamson's target zone proposal. In particular, the tradeoff between softness and zone width is quantified. This may be helpful in choosing appropriate margins. Furthermore, it offers policymakers a framework for reference in the case of changing exchange rate policy. The empirical applications include an evaluation of the EMS zone width. We also show that the procedures for calculating the soft margins are robust against alternative data-generating mechanisms.
Keywords
Automatically Extracted Terms
- margin
- exchange
- zone width
- softness
- tolerance limits
- width
- policy
- 0.038
- table
- 0.220
- exchange rates
- currency
- tolerance
- limit
- threshold
- 0.311
- sample
- example
- divergence
- period
