This paper presents a model of an economy that uses nominal exchange rate policy to keep the real exchange rate constant at a certain target level, under imperfect asset substitutability. The paper discusses the determinants of inflation under such a policy, and examines the consequences of...

This paper compares two alternative dual exchange market regimes. In one of them, the official market clears through changes in international reserves, while in the other regime, the central bank implements a rationing scheme so as to keep international reserves constant. The paper discusses the...

This paper examines the relationship between the long run rate of inflation and the allocation of transactions between markets in economies that operate dual exchange market regimes and ration foreign exchange in the official market. It shows that wider access of importers to the official...