Policy Measures to Avoid a Currency Crisis

Gulcin Ozkan and Alan Sutherland ()

Economic Journal, 1995, vol. 105, issue 429, 510-19

Abstract: This paper considers a number of policy measures that may be used to preserve a fixed exchange rate. These are analyzed in a model where a switch of exchange-rate regime is triggered by an optimizing policymaker in response to extreme economic conditions. It is shown how a number of policy measures can be used to alter the balance between the costs and benefits of switching between regimes. These policy measures have both a direct effect on the policymaker's choice of regime switching point and an indirect effect through private-sector expectations of a regime switch. Copyright 1995 by Royal Economic Society.

Date: 1995
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