IDEAS home Printed from
   My bibliography  Save this paper

The Persistence of Unemployment Under a Fixed Exchange Rate Peg


  • Olivier Jeanne.


This paper studies the dynamics of unemployment under a fixed exchange rate peg with an escape clause. The interesting aspects of these dynamics come from the interaction between unemployment and the devaluation expectations. While an increase in the unemployment rate raises the devaluation expectations, reciprocally the latter influence the unemployment rate through the level of interest rates. We present a model in which this interaction tends to increase the level and the persistence of unemployment, and can even generate some hysteresis in the unemployment dynamics that is associated with a currency crisis. The estimation of the model in the case of the French franc sheds new light on the franc crisis of 1992-93, as well as the franc fort policy and the convergence criteria of the Maastricht Treaty.

Suggested Citation

  • Olivier Jeanne., 1997. "The Persistence of Unemployment Under a Fixed Exchange Rate Peg," Center for International and Development Economics Research (CIDER) Working Papers C97-093, University of California at Berkeley.
  • Handle: RePEc:ucb:calbcd:c97-093

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    References listed on IDEAS

    1. Friedman, Milton, 1990. "The Crime of 1873," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1159-1194, December.
    2. E. A. Boehm, 1965. "Measuring Australian Economic Growth, 1861 To 1938‐39," The Economic Record, The Economic Society of Australia, vol. 41(94), pages 207-239, June.
    3. John W. Kendrick, 1961. "Productivity Trends in the United States," NBER Books, National Bureau of Economic Research, Inc, number kend61-1, January.
    4. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    5. Michael Dooley & Jeffrey Frankel & Donald J. Mathieson, 1987. "International Capital Mobility: What Do Saving-Investment Correlations Tell Us?," IMF Staff Papers, Palgrave Macmillan, vol. 34(3), pages 503-530, September.
    6. Maddison, Angus, 1992. " A Long-Run Perspective on Saving," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(2), pages 181-196.
    7. Alan M. Taylor, 1996. "International Capital Mobility in History: The Saving-Investment Relationship," NBER Working Papers 5743, National Bureau of Economic Research, Inc.
    8. Alan M. Taylor, 1996. "International Capital Mobility in History: Purchasing-Power Parity in the Long Run," NBER Working Papers 5742, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Barry Eichengreen & Olivier Jeanne, 2000. "Currency Crisis and Unemployment: Sterling in 1931," NBER Chapters,in: Currency Crises, pages 7-43 National Bureau of Economic Research, Inc.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucb:calbcd:c97-093. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.