An analysis of the two-tier foreign exchange market
V. Barattieri,G. Ragazzi +1 more
TLDR
In this paper, the authors analyse the possible effects of the two-tier foreign exchange market and compare it with other instruments designed to reduce the undesired repercussions of high capital mobility.Abstract:
This paper analyses the possible effects of the two-tier foreign exchange market. This system, which has been in operation in Belgium for over 15 years, has recently found new supporters, as is indicated by the fact that during the international monetary crisis of May 1971 the EEC Commission counselled its adoption. The author first analyses the reasons which may justify restrictions on the freedom of capital movements, both in the short run and in the longer term. Some of the technical characteristics of a two-tier foreign exchange market are then examined before the well-known Mundell analysis of the efficiency of monetary and fiscal policy in an open economy is extended to the case of a country with such a system. Finally, the author draws some conclusions and compares a two-tier system with other instruments designed to reduce the undesired repercussions of high capital mobility.read more
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Journal ArticleDOI
Exchange rate expectations in dual exchange markets
TL;DR: In this paper, a model of a small country operating a dual exchange market system was developed and examined, where the rational formation of expectations of the financial market exchange rate was examined.
Journal ArticleDOI
Separate Exchange Markets for Capital and Current Transactions (Marchés des changes distincts pour les opérations sur capital et les opérations courantes) (Mercados cambiarios separados para las transacciones corrientes y de capital)
TL;DR: The case in favor of a dual exchange market system is shown to depend on the assumptions that a neutral intervention policy is being pursued and that such a policy can be effectively implemented as mentioned in this paper.
Journal ArticleDOI
Insulation Properties of a Two-Tier Exchange Market in a Portfolio Balance Model
TL;DR: In this article, the authors investigated how well a two-tier exchange market insulates a small open economy from foreign disturbances, taking into account recent developments in the theory of exchange rate determination.
Journal ArticleDOI
A Portfolio Balance Model for a Two-Tier Exchange Market
B. Decaluwe,A. Steinherr +1 more
TL;DR: In this paper, the authors analyse the two-tier exchange market in the context of a macroeconomic model that is more general than the traditional IS-LM framework, which assumes perfect substitutability among all assets besides money.
Journal ArticleDOI
Exchange-rate regimes in transition: Italy 1974
Robert P. Flood,Nancy P. Marion +1 more
TL;DR: In this paper, a model of exchange-rate regimes in transition was developed to explain the behavior of the lira during the operation of the Italian two-tier exchange market in 1973-74.
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