The view held by Keynes that there was a speculative appreciation of sterling prior to its return to the gold standard, has been challenged by Gregor Smith and Todd Smith, who argue that expectations of return must have weakened the currency. The authors demonstrate that the positive but...

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...

In the first decade of its existence, the European Monetary System passed through three phases of realignments: full accommodation, partial accommodation, and zero accommodation of inflation differentials. But to what extent does the new freedom of capital movements rule out such gradual...

Many recent papers suggest that the basic flex-price target zone model does not perform well empirically. This paper investigates the testable implications of a sticky-price target zone model and finds that, to a limited extent, it has a better empirical performance than the simplest flex-price...