One test of an exchange-rate peg is to ask whether the implicit inflation target of the pegging country is the same as … that of the anchor country. If the inflation targets of the two countries are different, the peg's long-run credibility …

In Korea's high-growth economy, the Bank of Korea had been willing to tolerate double-digit inflation, provided that it … upper threshold of tolerable inflation for the Bank of Korea was about 20 percent. It appears that the Bank of Korea …'s disciplined, rule-like approach to monetary policy was able to control inflation and keep it away from explosive levels, despite …