This paper evaluates the possible problems in formulating macroeconomic policy as participating Member States proceed to adopt a single currency , and considers policy coordication and objectives , seigniorage, cohesion and dynamic economic and political considerations during the transition period.

The risk premium is a function of both the interest rate differential and the gap between the current exchange rate and its long-run equilibrium in a model of the foreign exchange market with both non-speculating traders and rational speculators. If the speculators have an alternative to...

This paper discusses within a common analytical framework the logical and analytical links between theories of exchange rate crises that model the abandonment of a peg as an optimizing decision by rational policy makers, and theories that focus on the dynamics of speculative attacks when...

The authors starts by giving his interpretation of the dollar's slide and to what extent, if any, this has posed a policy issue. Against that background, he moves on to discuss possible exchange rate regimes for Canada more generally -focussing on what it takes to make them work. His basic...

The crisis of the European exchange-rate system (ERM) in 1992093 was a critical event in the post- Bretton Woods history of the international monetary system. A full understanding of the causes, origins, and implications of the ERM breakdown can privide policy lessons that are particularly...

An often heard view is that exchange rate variability will decrease for a country that joins the EMU. This is not necessarily true. Both real and nominal exchange rate variability increase under certain circumstances when asymmetric demand shocks occur inside or outside the union. These results...

This paper examines a continuous-time two-country dynamic monetary equilibrium in which countries with possibly heterogeneous tastes and endowments hold their own money for the purpose of transaction services formulated via money in the utility function.

The authors use cointegration techniques to test for (i) Purchasing Parity on the bilateral exchange rate between Laos and Thailand, and (ii) the existence of a long run equilibrium relationship between the official and parallel market exchange rates.

The empirical evidence presented in this paper casts serious doubts on the by now widely accepted "stylized factes" of the exchange rate based stabilization programs (ERBS) as they are stated in Kiguel and Liviatan (1992) and in vegh (1992).

Empirical evidence shows that fixed exchange rates do not provide more fiscal discipline than flexible regimes, despite the fact that, in priciple, fixing the exchange rate imposes important restrictions on seignoriage revenues. A more detailed analysis of seignoriage allows to explain the...