In order to combat inflation, Israel launched a stabilization program in July 1985 which resulted in inflation decreasing to a low 20 percent annually as compared with more than 400 percent in 1984. What contributed to this decline? This paper attempts to analyze the major factors which made the...

Drawing on evidence from a large sample of speculative attacks in industrial and developing countries, the author argues that high interest rates do not defend currencies against speculative attacks. In fact, there is a striking lack of any systematic association between interest rates and the...

The author analyzes the macroeconomic effects of inflation in the nontradables sector of a small open economy to suggest how different macroeconomic policies would facilitate structural adjustment after price liberalization in a transition economy. She uses a Mundell-Fleming rational...

The author uses a regime switching framework to study speculative attacks against European Monetary System (EMS) currencies during 1979-93. She identifies speculative attacks by modeling exchange rates, reserves, and interest rates as time series subject to discrete regime shifts. She assumes...

To examine whether a country's exchange rate regime has any impact on inflation and growth performance in transition economies, the authors develop an empirical framework that addresses some of the main problems plaguing empirical work in this strand of the literature: the Lucas critique, the...

The authors develop a simple, formal framework for clarifying the tradeoffs involved in choosing between a fixed and flexible exchange rate system. They apply this framework to the countries of Africa's CFA Zone, which have maintained fixed parity with the French franc since independence....

Estimating the degree of exchange-rate misalignment remains one of the most challenging empirical problems in an open economy. The basic problem is that the value of the real exchange rate is not observable. Standard theory tells us, however, that the equilibrium real exchange rate is a function...

The author reviews possible trade and exchange rate policies of the former Soviet Union. Alternative exchange rate regimes, including a monetary union are considered. For Russia, a fixed but adjustable regime is most realistic. Frequent adjustment may be desirable, to prevent the use of trade...

The authors exploit three-dimensional panel data on prices for twenty seven traded goods, over eighty eight quarters, across ninety six cities in Japan, and the United States, to answer several questions: 1) Does the average exchange rate between countries stray further from zero, than that...

After discussing major conceptual, and empirical issues relevant to the exchange rate policies of East Asian countries, the authors propose a regional exchange rate arrangement designed to promote intra-regional exchange rate stability, and regional economic growth. They argue that: 1) For...