Even though they can last for decades, fixed exchange rate regimes are increasingly seen as temporary arrangements, (Eichengreen, 1994). The hollowing out hypothesis, see, e.g. Fischer (2001), holds that fixed but adjustable exchange rate regimes of various kinds are scheduled to disappear in...

A striking and unexpected feature of the financial crisis has been the sharpappreciation of the US dollar against virtually all currencies globally. The paper findsthat negative US-specific macroeconomic shocks during the crisis have triggered asignificant strengthening of the US dollar, rather...

A large part of the current debate on US stock price behaviorconcentrates on the question of whether stock prices are driven byfundamentals or by non-fundamental factors(...)

The objective of this paper is to analyze the effects of alternative monetary rules on realexchange rate persistence. Using a two-country stochastic dynamic general equilibrium withnominal price stickiness and local currency pricing, we will show how the persistence ofpurchasing power parity...

Real effective exchange rate volatility is examined for 90 countries using monthlydata from January 1990 to June 2006. Volatility decreases with openness tointernational trade and per capita GDP, and increases with inflation, particularlyunder a horizontal peg or band, and with terms-of-trade...

[...]This article demonstrates that the Bank Holiday that beganon March 6, 1933, marked the end of an old regime, and theFireside Chat a week later inaugurated a new one. TheEmergency Banking Act of 1933, passed by Congress onMarch 9—combined with the Federal Reserve’s commitmentto supply...

This paper explains a currency crisis as an outcome of a switch in how monetarypolicy and fiscal policy are coordinated. The paper develops a model of an open economy in which monetary policy starts active, fiscal policy starts passive and, in a particular state of nature, monetary policy...

We examine empirically the response of bond returns and their volatility to good and bad macroeconomic news in economic expansions and recessions. We find that the information content of macroeconomic announcements is mostimportant when it contains bad news for bond returns in expansions and,...

This paper presents a pricing model of commercial and industrial (C&I) loan prepayment option. Modeling of prepayment is essential in pricing mortgage contracts since prepayment truncates the timing and amount of expected cash flows. Lenders normally charge a penalty for prepayment, for example...