Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/69522
Authors: 
Reitz, Stefan
Taylor, Mark P.
Year of Publication: 
2013
Series/Report no.: 
Kiel Working Paper 1827
Abstract: 
Although the ERM II rules allow the Danish krone to fluctuate against the euro within an official target zone of 4.5%, most of the time the exchange rate has remained in a narrow range around its unconditional mean. Estimating a Smooth Transition Autoregression Target Zone (STARTZ) model confirms that the exchange rate exhibits target zone dynamics consistent with a band of approximately 0.75 percent around its unconditional mean. We conclude that the Danmark Nationalbank intervention policy of intra-marginal operations successfully managed an informal target zone in the foreign exchange market.
Subjects: 
Target zone
STARTZ model
Intervention
JEL: 
E58
F31
G15
Document Type: 
Working Paper

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