01799cas a2200253 a 4500 AALejournalIMF001233 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451852011 1018-5941 BD-DhAAL BD-DhAAL Sy, Amadou. Currency Boards, Credibility, and Macroeconomic Behavior / Amadou Sy, Luis Rivera-Batiz. Washington, D.C. : International Monetary Fund, 2000. 1 online resource (45 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Currency boards operate differently from standard pegs. The former exhibit greater currency stability and lower transaction costs, inflation, and nominal interest rates, but are limited in their use of devaluation. We extend Drazen and Masson's (1994) signaling model to consider the choice between currency board arrangements and standard pegs. The model shows that currency boards' effectiveness hinges on their credibility properties and that they can improve welfare even with high unemployment persistence. By reducing expected inflation and the negative employment effect arising from expected but unrealized inflation, currency boards can produce less unemployment than peg regimes that abstain from devaluation. Mode of access: Internet Rivera-Batiz, Luis. IMF Working Papers; Working Paper ; No. 2000/097 Full text available on IMF http://elibrary.imf.org/view/journals/001/2000/097/001.2000.issue-097-en.xml IMF e-Library