Aizenman, Joshua (contributor); Glick, Reuven (contributor) - 2005
with the duration of
the peg before the crisis. We explain these observations in a framework in which the
exchange rate … peg is used as a commitment mechanism to achieve inflation stability, but
multiple equilibria are possible. We show that … output losses.
That is, the longer the duration of a peg before its collapse, the greater is the adverse effect on
the …