Template-type: ReDIF-Paper 1.0 Author-Name: Neven Valev Author-Email: nvalev@gsu.edu Author-Homepage: http://aysps.gsu.edu/ValevN.html Author-Workplace-Name: International Studies Program. Andrew Young School of Policy Studies, Georgia State University Author-Workplace-Homepage: https://icepp.gsu.edu/ Author-Name: John A. Carlson Author-Email: Author-Homepage: Title: Tenuous Financial Stability Abstract: Many countries fix their exchange rate in order to bring financial stability. Usually, inflation declines and output expands but contractual agreements retain their short time frame, investment is sluggish, and economic growth slows down a few years later. This outcome is often attributed to persistent doubts on the part of agents in the commitment and ability of the government to maintain the peg. Yet direct evidence for credibility is difficult to obtain. Unique survey data from Bulgaria reveal that expectations of devaluation were indeed very much present three years after that country achieved financial stability under a currency board regime. Keywords: financial stability Length: 20 pages Creation-Date: 2002-05-01 File-URL:http://icepp.gsu.edu/files/2015/03/ispwp0210.pdf File-Format: Application/pdf Handle: RePEc:ays:ispwps:paper0210