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| Author: | Velasco, A. |
| Title: | Fixed exchange rates: Credibility, flexibility and multiplicity |
| Journal: | European Economic Review
1996 : APR, VOL. 40:3-5, p. 1023-1035 |
| Index terms: | EXCHANGE RATES EUROPEAN MONETARY SYSTEM DEVALUATION |
| Language: | eng |
| Abstract: | The paper surveys recent work on the sustainability of fixed exchange rates. It considers a dynamic version of the Barro-Gordon framework. Multiple equilibria and self-fulfilling runs are possible, but only at certain levels of debt. A surprise devaluation can either increase or decrease future expected devaluation relative to a no-devaluation situation. |
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