On exchange-rate stabilization

Kiminori Matsuyama*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

6 Scopus citations


This paper extends Calvo's (1986) and Obstfeld's (1985) analyses of stabilization policies through predetermined exchange rates in a few directions. The graphic and analytical techniques used here make it possible to perform a variety of policy experiments under a general utility function and in the presence of a consumer durable good (or under time-nonseparable preferences). It also shows that the dynamic process of exchange-rate stabilization exhibits hysteresis effects. That is, the steady-state behavior of the economy depends on the initial condition and a temporary stabilization policy has a permanent effect on the economy.

Original languageEnglish (US)
Pages (from-to)7-26
Number of pages20
JournalJournal of Economic Dynamics and Control
Issue number1
StatePublished - Jan 1 1991

ASJC Scopus subject areas

  • Economics and Econometrics
  • Control and Optimization


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