Problem
A peg is not credible when investors fear depreciation in the future, despite official announcements. Why is the home interest rate always higher under a non credible peg than under a credible peg? Why does that make it more costly to maintain a non credible peg than a credible peg? Explain why nothing more than a shift in investor beliefs can cause a peg to break.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.