Please provide opions and knowledge on the statements below…
According to Zanna (2009), in order to maintain competitiveness, governments in developing economies seem to have pursued purchasing power parity (PPP) exchange rate rules, by adjusting the nominal devaluation rate in response to real exchange rate deviations from an intermediate target. Zanna (2009) argue that these rules are likely to induce macroeconomic instability, as they generate sunspot-driven fluctuations that are, in fact, learnable by agents in the Expectational-Stability sense.
