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Abstract
This paper interprets the resulting regime when a number of countries tie their currencies to unilaterally designed baskets of other currencies, as a noncooperative exchange rate system. Consistency and stability of such a system of currency baskets are investigated through an application of the Frobenius-Perron Theorem on semipositive square matrices. It is established that devaluations preserve (while sufficiently large revaluations undermine) these properties. This asymmetry is caused by the use of arithmetic baskets which do not preserve effective weights when exchange rates differ from their base settings.
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