To peg or not to peg?: A simple model of exchange rate regime choice in small economies
AbstractThe choice of an exchange rate peg often points to a trade-off between gaining credibility and losing flexibility. We show that the flexibility loss may be reduced if domestic and foreign shocks are coorelated and more volatile. Allowing for a plausible structural change after a peg, a flexibility gain may result.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 73 (2001)
Issue (Month): 2 (November)
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Web page: http://www.elsevier.com/locate/ecolet
Other versions of this item:
- Helge Berger & Henrik Jensen & Guttorm Schjelderup, 2001. "To Peg or Not To Peg? A Simple Model of Exchange Rate Regime Choice In Small Economies," CESifo Working Paper Series 468, CESifo Group Munich.
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