Glaubwürdigkeit, Zeitinkonsistenz und Zinsdifferenzen in einem System fester Wechselkurse — Ein Kommentar
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Glaubwürdigkeit, Zeitinkonsistenz und Zinsdifferenzen in einem System fester Wechselkurse — Ein Kommentar
Credit and Capital Markets – Kredit und Kapital, Vol. 30 (1997), Iss. 4 : pp. 552–569
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Franz Xaver Hof, Wien
References
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Blanchard, O. and S. Fischer, 1989, Lectures on Macroeconomics, MIT Press.
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Abstract
Credibility, Time Inconsistency and Interest Rate Differences in a Fixed Exchange Rate System - Comment
In Spahn (1996) an attempt was made to apply the Barro-Gordon approach to a small open economy. In this comment it is shown that Spahn’s specification of the Mundell-Fleming model has to be modified and made more precise in order to make consistent interpretations of the model possible. Next, in line with the mainstream literature, Spahn’s model is extended as follows: Firstly, rational expectations are introduced. Secondly, analyzing the one-shot game not only the precommitment solution and the fooling solution, but also the time consistent solution are analyzed. It is shown that the results derived for the small open economy are more complex than those corresponding to the closed economy case provided that the small open economy model is specified correctly. Moreover, these results are unsatisfactory from an empirical point of view. Finally, it is roughly outlined why the analysis of the repeated game would be even more difficult than could be inferred from the verbal sketch by Spahn.