Hallett, Andrew Hughes; Kavanagh, Ella - In: Open Economies Review 12 (2001) 2, pp. 145-161
A three-country model is used to analyze how country size affects inflation under different exchange rate regimes. Two … follower is very small. However, as the follower gets smaller, the leader's inflation worsens under floating but improves under … the single-currency peg. For the follower, as it gets smaller, its inflation performance improves when it floats its …