Credibility, Cost of Reneging and the Choice of Fixed Exchange Rate Regime

The choice of exchange rate regime is considered for a small open economy. Assuming that different forms of fixed exchange rate regimes involve different costs of reneging, it is shown that one potential beneficial aspect of joining a monetary union with a common currency is that it is less likely to be exposed to ''speculative attacks'' than less formalized fixed exchange rate arrangements.

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Authors:	Rasmussen, Bo Sandemann
Institutions:	School of Economics and Management, University of Aarhus
Subject:	Monetary union \| fixed exchange rate \| credibility \| cost of reneging \| multiple equilibria

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Extent:	application/pdf
Series:	Economics Working Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	1 pages long
Classification:	F33 - International Monetary Arrangements and Institutions ; F41 - Open Economy Macroeconomics
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005439929