After disinflation has been achieved, agents who form more sophisticated forecasts have lower confidence in the sustainability of a peg compared to less sophisticated agents. Furthermore, sustained financial stability leads to a declining proportion of sophisticated agents. Thus, the credibility...

Currency pegs seldom achieve full credibility even after delivering low inflation and a stable exchange rate for many years. We use unique survey data from Bulgaria's currency board to investigate the origins of incomplete credibility. We show that the limitations imposed by the currency board...

This article examines the tradeoffs between wages and job-related advertising in the recruitment of new employees. We hypothesize that when wages are limited by controls, firms increase their use of nonwage recruiting methods. We find support for this hypothesis by examining the effect of the...