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Author | : Mr.Guillermo Calvo |
Publisher | : International Monetary Fund |
Total Pages | : 50 |
Release | : 1994-02-01 |
Genre | : Business & Economics |
ISBN | : 1451921217 |
Download Targeting the Real Exchange Rate Book in PDF, ePub and Kindle
This paper presents a theoretical and empirical analysis of policies aimed at setting a more depreciated level of the real exchange rate. An intertemporal optimizing model suggests that, in the absence of changes in fiscal policy, a more depreciated level of the real exchange can only be attained temporarily. This can be achieved by means of higher inflation and/or higher real interest rates, depending on the degree of capital mobility. Evidence for Brazil, Chile, and Colombia supports the model’s prediction that undervalued real exchange rates are associated with higher inflation.
Author | : Carmen M. Reinhart |
Publisher | : |
Total Pages | : 50 |
Release | : 2006 |
Genre | : |
ISBN | : |
Download Targeting the Real Exchange Rate Book in PDF, ePub and Kindle
This paper presents a theoretical and empirical analysis of policies aimed at setting a more depreciated level of the real exchange rate. An intertemporal optimizing model suggests that, in the absence of changes in fiscal policy, a more depreciated level of the real exchange can only be attained temporarily. This can be achieved by means of higher inflation and/or higher real interest rates, depending on the degree of capital mobility. Evidence for Brazil, Chile, and Colombia supports the model`s prediction that undervalued real exchange rates are associated with higher inflation.
Author | : Mr.José Saúl Lizondo |
Publisher | : International Monetary Fund |
Total Pages | : 30 |
Release | : 1993-04-01 |
Genre | : Business & Economics |
ISBN | : 1451845626 |
Download Real Exchange Rate Targeting Under Imperfect Asset Substitutability Book in PDF, ePub and Kindle
This paper presents a model of an economy that uses nominal exchange rate policy to keep the real exchange rate constant at a certain target level, under imperfect asset substitutability. The paper discusses the determinants of inflation under such a policy, and examines the consequences of exogenous and policy-induced shocks on inflation, the external accounts, and the fiscal accounts. The shocks considered include changes in the real exchange rate target, changes in fiscal policy, changes in foreign interest rates, and open market sales of public sector domestic bonds.
Author | : Mr.Peter Montiel |
Publisher | : International Monetary Fund |
Total Pages | : 25 |
Release | : 1991-07-01 |
Genre | : Business & Economics |
ISBN | : 1451961014 |
Download Real Exchange Rate Targeting Under Capital Controls Book in PDF, ePub and Kindle
This paper examines the issue of whether the money supply can serve as a nominal anchor for the domestic price level under real exchange rate targeting. When capital controls are perfect so that there is complete separation between official and unofficial markets for foreign exchange, the domestic inflation rate can be stabilized, but only at the expense of a widening gap between official and parallel market exchange rates. When cross - transactions between the two markets are permitted, the steady state of the model is identical to that of a model without capital controls and, hence, the money supply cannot serve as a nominal anchor for the price level in the long run. If capital controls are nevertheless maintained temporarily, and are known to be temporary, targeting the money supply fails to stabilize the rate of inflation even in the short run.
Author | : Carlos A. Végh |
Publisher | : |
Total Pages | : 37 |
Release | : 1994 |
Genre | : America |
ISBN | : |
Download Targeting the Real Exchange Rate Book in PDF, ePub and Kindle
Author | : Peter Montiel |
Publisher | : |
Total Pages | : 24 |
Release | : 1993 |
Genre | : Foreign exchange rates |
ISBN | : |
Download Real Exchange Rate Targeting in Developing Countries Book in PDF, ePub and Kindle
Author | : Mr.Marco Airaudo |
Publisher | : International Monetary Fund |
Total Pages | : 65 |
Release | : 2016-03-08 |
Genre | : Business & Economics |
ISBN | : 1475523165 |
Download Inflation Targeting and Exchange Rate Management In Less Developed Countries Book in PDF, ePub and Kindle
We analyze coordination of monetary and exchange rate policy in a two-sector model of a small open economy featuring imperfect substitution between domestic and foreign financial assets. Our central finding is that management of the exchange rate greatly enhances the efficacy of inflation targeting. In a flexible exchange rate system, inflation targeting incurs a high risk of indeterminacy where macroeconomic fluctuations can be driven by self-fulfilling expectations. Moreover, small inflation shocks may escalate into much larger increases in inflation ex post. Both problems disappear when the central bank leans heavily against the wind in a managed float.
Author | : J. Saul Lizondo |
Publisher | : |
Total Pages | : 30 |
Release | : 2006 |
Genre | : |
ISBN | : |
Download Real Exchange Rate Targeting Under Imperfect Asset Substitutability Book in PDF, ePub and Kindle
This paper presents a model of an economy that uses nominal exchange rate policy to keep the real exchange rate constant at a certain target level, under imperfect asset substitutability. The paper discusses the determinants of inflation under such a policy, and examines the consequences of exogenous and policy-induced shocks on inflation, the external accounts, and the fiscal accounts. The shocks considered include changes in the real exchange rate target, changes in fiscal policy, changes in foreign interest rates, and open market sales of public sector domestic bonds.
Author | : Martín Uribe |
Publisher | : |
Total Pages | : 52 |
Release | : 2002 |
Genre | : Foreign exchange rates |
ISBN | : |
Download Real Exchange Rate Targeting and Macroeconomic Instability Book in PDF, ePub and Kindle
Using an optimizing model of a small open economy, this paper studies the macroeconomic effects of PPP rules whereby the government increases the devaluation rate when the real exchange rate defined as the price of tradables in terms of nontradables is below its long-run level and reduces the devaluation rate when the real exchange rate is above its long-run level. The paper shows that the mere existence of such a rule can generate aggregate fluctuations due to self-fulfilling revisions in expectations. The result is shown to obtain in both flexible- and sticky-price environments.
Author | : Peter J. Montiel |
Publisher | : |
Total Pages | : 54 |
Release | : 1991 |
Genre | : Developing countries |
ISBN | : |
Download Macroeconomic Implications of Real Exchange Rate Targeting in Developing Countries Book in PDF, ePub and Kindle