The research project constructs a two-country optimizing model to study the intertemporal constraints which fixed exchange rates impose on fiscal policy. These constraints are identified, and empirical tests are proposed. The timing of exchange rate collapse is investigated. The viability of a fixed rate system is shown to depend on speculators' expectations regarding the intertemporal fiscal constraint. The vulnerability of the fixed rate system to speculative attack is dependent on the assumptions about capital mobility. The timing of exchange rate collapse under alternative assumptions about impediments to capital flows will be investigated. Interactive activities include teaching a course in International Economics and conducting a seminar series with visiting speakers in the same field. Additional activities include presenting a research workshop, participating in ongoing workshops, counseling students on their research, attending a faculty meetings, and organizing brown bag lunches for graduates and undergraduates featuring outside speakers.
