As Reservas e o Caso de Bandas Múltiplas

Abstract

The paper addresses the issue of frequent government interventions in the exchange rate market in the attempt to stabilize the exchange rate. The problem is reduced to a simple comparison between two regimes. In the first one, the government intervenes at a single exchange rate level. In the other regime the intervention occurs at two different levels. Using techniques common to the Target Zone literature, the paper shows that more frequent interventions lead to short run stability at the expense of a more volatile exchange market afterwards.