Abstract
The problem of establishing rational foundations for macroeconomic policy is considered. The author considers the dirty float situation in which the exchange rate is managed by the monetary authorities. The question of the criteria which should be followed arises is examined. The introduction of the exchange rate as a control variable in a policy optimization problem makes it possible to obtain the optimal path for this variable, which can be considered as a guideline for the monetary authorities. Optimal control experiments carried out in the context of an economy-wide macroeconometric model are also a useful test of the effectiveness of an optimally managed exchange rate.
| Original language | English |
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| Pages (from-to) | 1013-1015 |
| Number of pages | 3 |
| Journal | Proceedings of the IEEE Conference on Decision and Control |
| DOIs | |
| Publication status | Published - 1986 |
| Externally published | Yes |