Is The Parallel Market Premium A Reliable Indicator Of Real Exchange Rate Misalignment In Developing Countries PDF Download
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Author | : Mr.Peter Montiel |
Publisher | : International Monetary Fund |
Total Pages | : 26 |
Release | : 1993-08-01 |
Genre | : Business & Economics |
ISBN | : 1451960352 |
Download Is the Parallel Market Premium a Reliable Indicator of Real Exchange Rate Misalignment in Developing Countries Book in PDF, ePub and Kindle
It is often argued that the parallel market premium is a useful indicator of real exchange rate misalignment in developing countries. The empirical evidence does not, however, suggest the existence of a robust correlation between these two endogenous variables that is independent of the nature of economic shocks and various structural relationships in the economy. This paper presents an analytical investigation of the reliability of the parallel market premium as an indicator of real exchange rate misalignment in the context of a fully optimizing model of a developing country. The analysis suggests that one should exercise caution in drawing inferences about the sign and magnitude of real exchange rate misalignment from the parallel market premium.
Author | : Peter J. Montiel |
Publisher | : |
Total Pages | : 26 |
Release | : 2006 |
Genre | : |
ISBN | : |
Download Is the Parallel Market Premium a Reliable Indicator of Real Exchange Rate Misalignment in Developing Countries? Book in PDF, ePub and Kindle
It is often argued that the parallel market premium is a useful indicator of real exchange rate misalignment in developing countries. The empirical evidence does not, however, suggest the existence of a robust correlation between these two endogenous variables that is independent of the nature of economic shocks and various structural relationships in the economy. This paper presents an analytical investigation of the reliability of the parallel market premium as an indicator of real exchange rate misalignment in the context of a fully optimizing model of a developing country. The analysis suggests that one should exercise caution in drawing inferences about the sign and magnitude of real exchange rate misalignment from the parallel market premium.
Author | : Fondo Monetario Internacional |
Publisher | : |
Total Pages | : 18 |
Release | : 1993 |
Genre | : |
ISBN | : |
Download Is the parallel market premium a reliable indicator of real exchange rate misalignment in developing countries? Book in PDF, ePub and Kindle
Author | : Peter J... Montiel |
Publisher | : |
Total Pages | : 18 |
Release | : 1993 |
Genre | : |
ISBN | : |
Download Is the parallel market premium a realiable indicator of real exchange rate misalignment in developing countries? Book in PDF, ePub and Kindle
Author | : Sebastian Edwards |
Publisher | : Johns Hopkins University Press |
Total Pages | : 112 |
Release | : 1988 |
Genre | : Developing countries |
ISBN | : |
Download Exchange Rate Misalignment in Developing Countries Book in PDF, ePub and Kindle
This article analyzes the theory of equilibrium real exchange rates and defines misalignment as a deviation of the real exchange rate (RER) from its equilibrium level. The role of macroeconomic policies is then analyzed under three alternative nominal exchange rate regimes: predetermined nominal exchange rates; floating nominal rates; and dual or black market nominal exchange rates. This discussion points out how inconsistent macroeconomic policies often lead to real exchange rate misalignment. Corrective measures, including nominal devaluation and several alternative approaches, are then evaluated.
Author | : International Monetary Fund |
Publisher | : International Monetary Fund |
Total Pages | : 52 |
Release | : 1990-12-01 |
Genre | : Business & Economics |
ISBN | : 1451943229 |
Download Parallel Currency Markets in Developing Countries Book in PDF, ePub and Kindle
The paper reviews recent theoretical and empirical developments in the analysis of informal currency markets in developing countries. The basic characteristics of these markets are highlighted, and alternative analytical models to explain them are discussed. The implications for exchange rate policy —including imposition of foreign exchange restrictions, devaluation, and unification of exchange markets— in countries with a sizable parallel market are also examined.
Author | : Miguel A. Kiguel |
Publisher | : Springer |
Total Pages | : 411 |
Release | : 2016-07-27 |
Genre | : Business & Economics |
ISBN | : 1349255203 |
Download Parallel Exchange Rates in Developing Countries Book in PDF, ePub and Kindle
'...the most definitive study of the subject, assembling an all-star cast to address the many outstanding questions and succeeding beyond expectations in combining elegant theory and state of the art econometrics to reach very sensible policy conclusions.' - Mohsin S. Khan, Deputy Director, Research Department, International Monetary Fund ' This book fills an important vacuum in the literature of the economic consequences of parallel markets and should prove of great value to students of economic development and to policy-makers in developing countries as they struggle to reform their exchange rate and trade incentive systems. Here they will find all that they need to know.' - Vittorio Corbo, Professor of Economics, Universidad Catolica de Chile 'A most comprehensive treatment of the relationships between parallel foreign exchange markets and macroeconomic policies, both across countries and over time. The book substantially enhances our understanding of how these systems work in practice and will be of great interest to policy-makers, researchers and graduate students of economic policy.' - Samuel M. Wangwe, Professor of Economics, University of Dar es Salaam and Executive Director, Economic and Social Research Foundation, Dar es Salaam, Tanzania This book examines extensive empirical evidence on the macroeconomic implications of parallel exchange rates in developing countries. Eight case-studies from Africa, Latin America, and Turkey provide detailed evidence on the emergence of parallel exchange rates, their impact on macroeconomic performance, and the criteria for successful exchange-rate unification. A chapter on European dual exchange rates summarizes the contrasting experience of industrial countries. An overview chapter lays out the analytical framework, assesses the evidence, and draws policy conclusions.
Author | : Ibrahim A. Onour |
Publisher | : |
Total Pages | : 0 |
Release | : 2004 |
Genre | : |
ISBN | : |
Download Parallel Market Premia and Misalignment of Official Exchange Rates Book in PDF, ePub and Kindle
Due to restrictive foreign exchange policy and active parallel markets for foreign exchange in some developing countries, it is often believed that the real official exchange rate is undervalued (overvaluing the domestic currency). Since an overvalued domestic currency depress official current account below its equilibrium level, while an undervalued domestic currrency may be inflationary, it is important to be able to detect real official exchange rate misalignment as early as possible. This is difficult in economies where paparallel market for foreign currencies are well established and where it is therefore difficult to observe an underlying capital flows. We show that the direction of real official rate misalignment is identifiable without knowing the size of capital flow in the parallel market. We indicate that a change in the parallel market premium is an appropriate indicator of change in real official rate misalignment.
Author | : Pierre-Richard Agénor |
Publisher | : International Finance Section Department of Econ Ton Univers |
Total Pages | : 48 |
Release | : 1992 |
Genre | : Foreign exchange |
ISBN | : |
Download Parallel Currency Markets in Developing Countries Book in PDF, ePub and Kindle
Author | : Lawrence E. Hinkle |
Publisher | : World Bank Publications |
Total Pages | : 640 |
Release | : 1999 |
Genre | : Business & Economics |
ISBN | : |
Download Exchange Rate Misalignment Book in PDF, ePub and Kindle
The study cautiously identifies exchange rate misalignment as an important element in most of the exchange rate crises that plagued the developing world during the last decade. Given that the increasing integration of world capital markets, has escalated the costs of such crises, a broad consensus emerged in recent years, that the overriding objective of exchange rate policy in developing countries, should be to avoid episodes of prolonged, and substantial misalignment, i.e., situations in which the actual real exchange rate differs significantly from its long-run equilibrium value. It was the Bank's involvement in one such misalignment episode, that eventually led to this book. Following an overview on the concepts and measurement of exchange rate misalignment, its impact on the purchasing power parity, and the relationship between the external real exchange rate (RER), and the two-good internal RER for tradables non-tradables, the study presents methodologies - empirical applications - for estimating the RER equilibrium. The study reaches an optimistic conclusion - that enough is known to identify cases of misalignment, and be able to sound clear warning signals. The implication for exchange rate policy is that ignorance about the empirical value of the equilibrium exchange rate, cannot be used to clinch arguments for extreme exchange arrangements, such as clean floats, currency boards, and "dollarization."