In Dumas and Svensson (Journal of International Economics 36 (1994) 467) the lifetime
of a Krugman (Quarterly Journal of Economics 106 (1991) 669–682) type target zone model
is found to be extremely long. This paper shows that the lifetime of the identical target zone
regime can be much lower when real disturbances occur. In particular, the mean lifetime is
found to be very low when real disturbances occur and the real exchange rate elasticity of the
demand for domestic goods is very low. It is also shown that allowing for monetary disturbances
to have real effects has very little effect on the lifetime. The results indicate the conditions
under which real disturbances might trigger currency crises
