Publisher Summary This chapter discusses the operation and collapse of fixed exchange
rate regimes. It reports recent research contributions to the understanding of the dynamics of …

This study introduces two novel metrics that calculate the degree of shock asymmetry which
can be utilized to examine whether countries in a currency area face symmetric shocks. In …

A time-varying stochastic devaluation risk is introduced in a model of exchange rate target
zones. The model produces realistic patterns of covariation between exchange rates and …

Realignment expectations which measure exchange rate credibility are analyzed for
European exchange rates, using daily financial data since the inception of the EMS. It is …

The paper presents estimates of devaluation expectations for six ERM currencies relative to
the Deutsche mark, for the period March 1979–April 1992. Both the 'simplest test'and the …

The theory of exchange rate target zones focuses on the role of exchange rate expectations
in determining exchange rate behaviour and interest rate differentials in currency bands …

Under the assumption of no arbitrage, the credibility of an exchange rate target zone is
tested by whether domestic interest rates fall within" rate-of-return bands" between the …

We investigate the effects of short-term rate targeting by the Federal Reserve on the term
structure of interest rates, and make contributions at two levels. Using a new series of …

The paper discusses what we have learned from last year's currency crises in ERM and the
Nordic countries about fixed exchange rates as a means to achieve price stability. After …

The paper argues that the reason real world fixed exchange rate regimes usually have finite
bands, instead of completely fixed exchange rates between realignments, is that exchange …