Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/75704 
Year of Publication: 
2001
Series/Report no.: 
CESifo Working Paper No. 468
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
The choice of an exchange rate peg often points to a trade-off between gaining credibility and losing flexibility. We show that the flexibility loss may be reduced if domestic and foreign shocks are coorelated and more volatile. Allowing for a plausible structural change after a peg, a flexibility gain may result.
Subjects: 
Exchange rate regime choice
credibility versus flexibility
international spill-overs
imported stabilization
Document Type: 
Working Paper
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