The coordination channel has recently been established as an additional means by which foreign exchange market intervention may be effective. It is conjectured that strong and persistent misalignments of the exchange rate are caused by a coordination failure among fundamentals-based traders. In...

This paper studies how the interaction between policy maker's reputation for defending against speculative attacks and speculators' learning of the policy maker's type determines the emergence of speculative attacks and the outcome of regime change. If speculators receive conditionally...

When a country abandons a fixed, or target zone exchange regime it usually claims that the regime was "fundamentally" sound but that it was undermined by pernicious speculation. The validity of the claim is impossible to assess using only observable data-there always exists a future path of...

This paper investigates how electoral timing influences policymakers' responses to currency crises. Previous empirical research has shown that elections significantly influence both the probability that a currency crisis emerges and the government's policy responses to such crises. This paper...

The effects of a currency crisis on a country's economy depend on non-linear relations among several variables that characterize the economic, financial, legal, and socio-political structure of the country at the onset of the crisis. Those effects can be associated with contractions or...

This paper is a literature review of the current literature on currency “de-pegging”. The paper covers up-to-date literature on forces that drive countries to remove pegs. This paper covers mostly macroeconomic fundamentals of historic pegged currencies, and presents the most prominent...

This paper investigates how different monetary policy designs alter the effect of carry trades on a host small open economy. Capital inflows are expansionary, leading the central bank to raise the interest rate, increasing carry trades' returns, and generating further capital inflows (carry...

This paper empirically analyzes how exchange rate policy affects the issuance and pricing of international bonds for developing countries. We find that countries with less flexible exchange rate regimes pay higher sovereign bond spreads and are less likely to issue bonds. Quantitatively,...

This paper investigates the formalisation that in a small open economy flexible exchange rates act as a 'shock absorber' and mitigate the effects of external shocks more effectively. An intertemporal small open economy model with nominal rigidities, in which real shocks generate internal...