Abstract
Recent papers have analysed the effects of Britain's return to gold in 1925. One line of argument has been that the return to gold was a state-contingent regime switch. An alternative view is that it was time-contingent. This paper shows that these approaches are not mutually exclusive. The solution for the exchange rate is derived in a model where a switch to a fixed rate takes place either when a state-contingent trigger is reached or at a fixed time, whichever is the sooner. State-contingent and time-contingent elements are thus combined within the same model.
| Original language | English |
|---|---|
| Pages (from-to) | 361-374 |
| Number of pages | 14 |
| Journal | Journal of International Economics |
| Volume | 38 |
| Issue number | 3-4 |
| Publication status | Published - May 1995 |
Keywords
- REGIME SWITCHES
- EXCHANGE RATES
- STOCHASTIC PROCESSES