Fixed exchange rate credibility with heterogeneous expectations

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• 作者：John A. Carlson ; Naven Valev
• 关键词：Endogenous inattention ; Fixed-exchange-rate credibility ; Heterogeneous expectations ; Currency boards
• 刊名：Journal of Macroeconomics
• 出版年：2008
• 出版时间：December 2008
• 年：2008
• 卷：30
• 期：4
• 页码：1712-1722
• 全文大小：198 K

文摘

After disinflation has been achieved, agents who form more sophisticated forecasts have lower confidence in the sustainability of a peg compared to less sophisticated agents. Furthermore, sustained financial stability leads to a declining proportion of sophisticated agents. Thus, the credibility of a fixed exchange rate regime grows over time partly because fewer people pay attention to the workings of the monetary regime. These results are derived in a rules-versus-discretion model of a fixed exchange rate regime with heterogeneous agents. We provide unique supporting evidence using data on expectations and information about the monetary regime from Bulgaria’s currency board.