To peg or not to peg? : a simple model of exchange rate regime choice in small economies
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- Discussion papers (SAM) 
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 correlated and more volatile. Allowing for a plausible structural change after a peg, a flexibility gain may result.
UtgiverNorwegian School of Economics and Business Administration. Department of Economics