Interpreting the ERM Crisis: Country-Specific and Systemic Issues
AbstractMost interpretations of the Exchange Rate Mechanism crisis in 1992-93 ignore the key role played by structural policy spillovers among European countries, and overlook the effects of coordination (or lack thereof) of monetary and exchange rate policies among the countries making up the periphery of the system. This paper provides a simple analytical framework, able to encompass the recent literature on currency crises, while developing it by bringing out the decisive role of the strategic interactions among national policy makers in a multi-country monetary and exchange rate game. In contrast to an approach that focuses exclusively on country-specific issues, a systemic view is ultimately able to unravel more coherently, and more convincingly, the "puzzles" of the ERM crisis.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0321.
Date of creation: Jan 1997
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Other versions of this item:
- Willem H. Buiter & Giancarlo M. Corsetti & Paolo A. Pesenti, 1997. "Interpreting the ERM crisis: country-specific and systemic issues," LSE Research Online Documents on Economics 20361, London School of Economics and Political Science, LSE Library.
- Buiter, W.H. & Corsetti, G.M. & Pesenti, P.A., 1998. "Interpreting the ERM Crisis: Country-Specific and Systemic Issues," Princeton Studies in International Economics 84, International Economics Section, Departement of Economics Princeton University,.
- Buiter, Willem H & Corsetti, Giancarlo & Pesenti, Paolo, 1996. "Interpreting the ERM Crisis: Country-Specific and Systemic Issues," CEPR Discussion Papers 1466, C.E.P.R. Discussion Papers.
- F31 - International Economics - - International Finance - - - Foreign Exchange
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
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