Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
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 (EMS), the authors 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 that is dependent upon the exchange rate regime. By using the many EMS realignments, the authors are also able to quantify the 'peso problem.' Copyright 1996 by MIT Press.