A developing country often pegs its exchange rate to a single currency, such as the U.S. dollar, even though it faces a higher inflation rate than the country to which it is pegged. As a consequence, it experiences real exchange-rate misalignments and a series of easily anticipated devaluations....

This article uncovers some important empirical regularities surrounding the operation of formal dual exchange rates in Europe and Latin America in the 1970s and 1980s. There are interesting differences in terms of the size and nature of the distortion created by two official exchange rates, the...

This paper uncovers some important empirical regularities for the European dual exchange markets of the early 1970s, examines some of the stylized facts about the Latin American dual-rate regimes and assesses whether there are strong parallels between the two. It concludes that one should be...