To Peg or Not To Peg? A Simple Model of Exchange Rate Regime Choice In Small Economies
Helge Berger (),
Henrik Jensen () and
Guttorm Schjelderup ()
No 468, CESifo Working Paper Series from CESifo
The 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.
Keywords: Exchange rate regime choice; credibility versus flexibility; international spill-overs; imported stabilization (search for similar items in EconPapers)
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Journal Article: To peg or not to peg?: A simple model of exchange rate regime choice in small economies (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_468
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