Exchange Rate Uncertainty in Money-Based Stabilization Programs

The Effects of Capital Controlson Exchange Rate Volatility and Output

“…In this case, an increase in 't would increase w. 9 Note that in the steady state the expected exchange rate change is zero and, thus, neither chartists nor fundamentalists have any incentive to take positions in the foreign exchange market. Several authors have used the Frankel-Froot setup in different analyses, e.g.,Morales (1998).…”