EXCHANGE-RATE POLICY, CREDIBILITY AND INT EREST-RATE DETERMINATION - EXPERIENCES IN THE NORDIC COUNTRIES

The credibility of exchange rate policies in the Nordic countries in t he period from 1980 to the recent exchange rate crisis is evaluated by means of interest rate data. The Nordic countries have all pursued so me form of fixed exchange rate policy but have implemented it in quite different ways. Hence, a comparison of the Nordic countries may provi de insight on the importance of the institutional set-zip of a fixed e xchange rate policy. The empirical evidence does not, however, point t o significant differences between having the fixed exchange rate defin ed i) within the ERM of the EMS, ii) a unilateral peg to a trade-weigh ted currency basket or iii) a unilateral peg to the ECU.