Abstract
We analyze whether trade shocks put pressure on pegs to break. Using new high-frequency data on prices and export portfolios from the classical gold standard era, we identify a negative causal relationship between export-price shocks and currency-risk premia in emerging market economies. The results indicate that negative export-price shocks increased the probability that countries would abandon their pegs.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have