This paper examines whether decisions about the appropriate exchange rate regime in six Central American countries were based on longer-run economic fundamentals or on the confluence of historical and political circumstances. To uncover any actual relationship both across countries and across...

This paper distinguishes exchange rate variability from exchange rate misalignments and presents statistical measures in this regard. It uses PPP as a crude approximation of equilibrium exchange rates and shows that during periods of possible misalignments, the exchange rate variability of some...