The theory of self-fulfilling currency attacks predicts that pegged foreign exchange rates are extremely sensitive to adverse and hostile speculation. This is true whenever fiscal policy and monetary policy are inconsistent with each other, or even when intensive and public official intervention...

Even if China does revalue its currency, jobs aren’t likely to come flooding back to the United States. Much of what China exports to the U.S. originates in other Asian countries.

This paper seeks to quantify existing financial barriers among East African Community (EAC) member countries based on analysis of each member country’s foreign exchange market. The primary contribution of this paper is the generation of an aggregate measure of financial barriers for the...

Extant models of exchange rate behavior have typically relied on statistical rather than economic considerations. The approach has been to employ a variant of the generalized central limit theorem to develop tests for the models proposed. ; We propose a minimal set of simple economic...

Emerging market economies often face sudden stops in capital inflows or reduced access to the international capital market. This paper analyzes what monetary policy should accomplish in such an event. Optimal monetary policy induces higher interest rates and exchange rate depreciation. The...

This paper investigates the intraday effects of unannounced foreign exchange intervention on bid-ask exchange rate spreads using official intraday intervention data provided by the Danish central bank. Our starting point is a simple theoretical model of the bid-ask spread which we use to...

An analysis of U.S. foreign exchange-market intervention and its effect on dollar depreciation, finding there is no systematic relationship between intervention and daily exchange-rate movements.

This paper surveys the development and operation of the parallel exchange market in Argentina during the 1980s, and evaluates its impact upon macroeconomic performance and policy. The historical evolution of Argentina's exchange market policies is reviewed in order to understand the government's...

Rogers (l992a,b) I put forth the convertibility risk hypothesis in order to explain the anomalous n~gative relationship between the expected rate of Mexican peso depreciation and the ratio of Mexdollars to peso denominated demand deposits. Recently, Gruben and Welch (1994) examine the effect of...

This paper considers how exchange controls, black markets, and forward-looking expectations condition the impact of exchange rate devaluations in developing countries. A model incorporating these features is developed to analyze the response of key external balance indicators to anticipated...