This paper focuses on two questions. First, under what conditions would two countries agree to hold their bilateral cross exchange rate fixed? and second, what allocation of intervention duties would this require? Answers to these questions are sought by combining a standard macroeconomic model...

This paper considers arbitrage pricing of bonds and the determination of interest rates in the European Currency Unit (ecu) in situations of impending ecu basket adjustments. These adjustments disrupt the markets for private ecu assets with a lead of several months. The approach of the paper is...