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...

The paper develops a general stochastic macroeconomic model which can be used to study the international transmission of disturbances under alternative exchange-rate systems. Four types of exchange-rate systems are considered: uniform flexible exchange rates, uniform fixed exchange rates,...

We develop a modified understand better the 1994 Mexican peso crisis as well as aspects of the European currency crises in 1992-93. We introduce the assumption that the speculative attack is sterilized by the domestic monetary authority, we incorporate a stochastic risk premium, and we allow for...