We study a model where the aggregate trading of currency speculators reveals new information to the central bank and affects its decision on whether to abandon a fixed exchange rate regime. We show that the learning process gives rise to informational complementarities among traders, which generates coordination motives in their trading and reduces the informational content of the market signal...

Inßation targeting regimes deÞne a performance measure for the central bank. A regime that places a large (small) weight on achieivng the target is analogous to a high (low) power incentive scheme. High powered incentive structures promote accountability but may distort stabilization policy. The optimal power under inßation targeting is derived under perfect and imperfect information. The funda...