In his seminal contribution on exchange rate crises, Krugman models speculative attacks as optimal market reactions to policy rules that are inconsistent with the inde…nite survival of a …xed nominal parity. Later contributions have shifted the focus of the analysis, modelling...

The discomfort a government suffers from speculation against its currency determines the strategic incentives of speculators and the scope for multiple currency-market equilibria. After describing an illustrative model in which high unemployment may cause an exchange rate crisis with...

The choice of exchange rate regime is considered for a small open economy. Assuming that different forms of fixed exchange rate regimes involve different costs of reneging, it is shown that one potential beneficial aspect of joining a monetary union with a common currency is that it is less...

In economic discussions, currency board systems are frequently described as arrangements with self-binding character to the monetary authorities by their strict rules and establishments by law. Hard pegs and especially currency boards are often seen as remedies to overcome economic and financial...

In economic discussions, currency board systems are frequently described as arrangements with self-binding character to the monetary authorities by their strict rules and establishments by law. Hard pegs and especially currency boards are often seen as remedies to overcome economic and financial...

In economic discussions, currency board systems are frequently described as arrangements with self-binding character to the monetary authorities by their strict rules and establishments by law. Hard pegs and especially currency boards are often seen as remedies to overcome economic and financial...

Recent research recognize that two balance sheet constraints can be of particular concern for an independent central bank: central bank equity cannot turn negative without any political and credibility risk, and central banks should avoid going insolvent if they want to maintain control over...

This paper documents Norges Bank's role in the long transition period from a fixed exchange rate regime to inflation targeting in Norway. It is shown that the Bank's leadership and influential department leaders wanted more exchange rate flexibility from early on. However, due to the division of...

We investigate dollar-sterling exchange rate expectations during the period 1890-1908. We show that the dollar faced a 'Peso problem' in that for much of the period financial markets expected it to depreciate against sterling, but this never in fact happened - i.e. expectations were persistently...

This paper shows that extending the convertibility guarantee of the traditional currency board to a second reserve currency brings about an automatic, market-driven change of the peg when the initial reserve currency appreciates beyond a specified level. The dual currency board thus maintains...