The researchers analyzed exchange rate expectations in the European Monetary System from 1987 to 1992. They looked at how macroeconomic factors influenced the likelihood of currency realignments. By studying interest rates, inflation, government deficits, and business cycles, they found that the stability of the system improved as German economic conditions aligned with other countries. Countries with weak economies were more likely to face devaluation pressures, while strong economies remained stable. The 1992 crisis was triggered by a shift in the German business cycle and strict monetary policies.