The Credibility of Nordic Exchange Rate Bands: 1987-1991


Sami Geadah ; Lars E. O. Svensson ; Tapio Saavalainen

Publication Date:

January 1, 1992

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate


The credibility of the exchange rate bands in the Nordic countries during 1987-91 is examined with two tests. The results suggest that the credibility of Finland’s exchange rate band within a twelve-month horizon could not be rejected except in the fall of 1991; however, the band lacked credibility within a five-year horizon throughout the period. Denmark’s and Norway’s bands lacked both short- and long-term credibility at the beginning of the period, but credibility could not be rejected from 1989 for Norway and as of 1990 for Denmark. The credibility of Sweden’s band within a one-year horizon could not be rejected up to fall 1989, but thereafter its credibility deteriorated sharply.


Working Paper No. 1992/003



Publication Date:

January 1, 1992



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