Why was the European Monetary System in 1992-93 swept by waves of disruptive speculative attacks? And what lessons emerged from that episode as regards the future of the European Monetary Union? This book provides a comprehensive assessment of the causes and implications of the 1992-93 crisis of the exchange rate mechanism. Cogent factual presentation, original theoretical analysis, and an interpretation rooted in theory, make this treatment by three leading economists essential reading to understand the process toward economic and political integration in Europe.
Contents
1. Introduction; 2. Exchange rate stability in Europe: a historical perspective; 3. The unfolding of the 1992–93 ERM crisis; 4. Financial markets and ERM credibility; 5. Modelling currency crisis; 6. A center-periphery model; 7. Unilateral pegs and escape clauses: the role of domestic credibility; 8. Policy coordination and currency crisis; 9. What causes the system to crumble; 10. Rebuilding the system: what next?
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