Explaining the Success of the New Wide Margins in the European Monetary System
LIFE Working Paper No. 94-24
Posted: 12 May 2000
Abstract
This note argues that the narrow exchange rate margins acted as a target for self-fulfilling speculative attacks leading to the "collapse" of the European Monetary System in August 1993. Exchange rate and interest rate behaviour after the collapse suggests that, by not immediately using their regained monetary freedom, authorities have been able to signal their commitment to stable exchange rates and regained much of their credibility.
JEL Classification: F30, F31
Suggested Citation: Suggested Citation
Beetsma, Roel M. W. J. and Vlaar, Peter J.G., Explaining the Success of the New Wide Margins in the European Monetary System. LIFE Working Paper No. 94-24, Available at SSRN: https://ssrn.com/abstract=6184
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