On the eve of a major change in the world monetary system, the adoption of a single currency in Europe, our theoretical understanding of the implications of the exchange rate regime for trade and capital flows is still limited. We argue that two key model ingredients are essential to address...

The uncertainty caused by the exchange rate crises of 1992-93 led to two questions: Is monetary union still feasible? What strategies are best for achieving convergence according to the Maastricht criteria? This article addresses these questions by examining the progress made by the five major...

A description of the exchange-rate mechanism of the European Monetary System and a discussion of some problems with the mechanism that apply to the operation of any target-zone system for maintaining exchange rates.

This paper presents an empirical analysis of speculative attacks on pegged exchange rates in 22 countries between 1967 and 1992. We define speculative attacks or crises as large movements in exchange rates, interest rates, and international reserves. We develop stylized facts concerning the...