@techreport{NBERw4928,
 title = "Fixes: Of The Forward Discount Puzzle",
 author = "Robert P. Flood and Andrew K. Rose",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "4928",
 year = "1994",
 month = "November",
 URL = "http://www.nber.org/papers/w4928",
 abstract = {Regressions of ex post changes in floating exchange rates on appropriate interest differentials typically imply that the high- interest rate currency tends to appreciate, the `forward discount puzzle.'  Using data from the European Monetary System, we find that a large part of the forward discount puzzle vanishes for regimes of fixed exchange rates.  That is, deviations from uncovered interest parity appear to vary in a way which is dependent upon the exchange rate regime.  By using the many EMS realignments, we are also able to quantify the `peso problem.'},
}