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The paper argues that the reason real world fixed exchange rate regimes usually have finite bands instead of completely …
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rejected. Later research has reconciled the theory with empirical results by allowing for imperfectly credible exchange rates …
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The paper discusses what we have learned from last year's currency crises in ERM and the Nordic countries about fixed exchange rates as a means to achieve price stability. After discussing the explanations for the crises, the paper concludes that fixed exchange rates are not a shortcut to price...
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