TY  - JOUR
AU  - Stockman,Alan C.
TI  - Real Exchange Rate Variability under Pegged and Floating Nominal        Exchange Rate Systems:  An Equilibrium Theory
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2565
PY  - 1990
Y2  - June 1990
UR  - http://www.nber.org/papers/w2565
L1  - http://www.nber.org/papers/w2565.pdf
N1  - Author contact info:
Alan C. Stockman
Department of Economics
University of Rochester
Rochester, NY  14627-0156
Tel: 585/275-7214
Fax: 585/256-2309
E-Mail: N/A user is deceased
AB  - This paper proposes a new explanation for the greater variability of real exchange rates under pegged than under floating nominal exchange rate systems. The explanation hinges on the propensity of governments to use international trade restrictions and financial restrictions for balance-of-payments purposes under pegged exchange rates. In particular. these restrictions become more likely during periods of time when countries suffer losses of international reserves than might. without policy changes. lead to a balance-of-payments crisis. This covariation of restrictions with reserve changes implies that real exchange rates will vary less under pegged than under floating exchange rates.
ER  -