Interest Rate Rules for Fixed Exchange Rate Regimes
Benigno, Gianluca, Pierpaolo Benigno, and Fabio Ghironi. “Interest Rate Rules for Fixed Exchange Rate Regimes”. Boston College Working Papers in Economics 468, 2000.
This paper shows that properly designed interest rate rules can be consistent with maintaining exchange rate stability. It sheds light on the relation between interest rate rules, exchange-rate regimes, and determinacy of the rational expectations equilibrium in a modern macroeconomic framework.