To Peg or Not To Peg? A Simple Model of Exchange Rate Regime Choice In Small Economies

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.

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Year of publication:	2001
Authors:	Berger, Helge ; Jensen, Henrik ; Schjelderup, Guttorm
Publisher:	Munich : Center for Economic Studies and ifo Institute (CESifo)
Subject:	Exchange rate regime choice \| credibility versus flexibility \| international spill-overs \| imported stabilization

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Series:	CESifo Working Paper ; 468
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	842592458 [GVK] hdl:10419/75704 [Handle] RePec:ces:ceswps:_468 [RePEc]
Source:	EconStor

Persistent link: https://www.econbiz.de/10010315066