Fiscal Discipline And The Choice Of Exchange Rate Regime

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Fiscal Discipline And The Choice Of Exchange Rate Regime

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Author : Aaron Tornell
language : en
Publisher:
Release Date : 1994

Fiscal Discipline And The Choice Of Exchange Rate Regime written by Aaron Tornell and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1994 with Foreign exchange rates categories.

On Fiscal Discipline And The Choice Of Exchange Rate Regime

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Author : Yan Sun
language : en
Publisher:
Release Date : 2000

On Fiscal Discipline And The Choice Of Exchange Rate Regime written by Yan Sun and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2000 with categories.

Fiscal Policy And The Choice Of Exchange Rate Regime

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Author : Aaron Tomell
language : en
Publisher:
Release Date : 1994

Fiscal Policy And The Choice Of Exchange Rate Regime written by Aaron Tomell and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1994 with categories.

Conventional wisdom claims that fixed exchange rates provide more fiscal discipline than do flexible rates, but the recent experiences in Europe, the record of Sub-Saharan countries in the 1980s, and the history of stabilization attempts in Latin America cast empirical doubts on this wisdom. To explore this puzzle we present a standard intertemporal model with perfect capital mobility and price flexibility, in which fiscal policy is endogenously determined by a maximizing fiscal authority.

Fiscal Discipline And Exchange Rates

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Author : João Tovar Jalles
language : en
Publisher: International Monetary Fund
Release Date : 2016-11-17

Fiscal Discipline And Exchange Rates written by João Tovar Jalles and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-11-17 with Business & Economics categories.

We look at the effect of exchange rate regimes on fiscal discipline, taking into account the effect of underlying political conditions. We present a model where strong politics (defined as policymakers facing longer political horizon and higher cohesion) are associated with better fiscal performance, but fixed exchange rates may revert this result and lead to less fiscal discipline. We confirm these hypotheses through regression analysis performed on a panel sample covering 79 countries from 1975 to 2012. Our empirical results also show that the positive effect of strong politics on fiscal discipline is not enough to counter the negative impact of being at/moving to fixed exchange rates. Finally, we use the synthetic control method to illustrate how the transition from flexible to fully fixed exchange rate under the Euro impacted negatively fiscal discipline in European countries. Our results are robust to a number of important sensitivity checks, including different estimators, alternative proxies for fiscal discipline, and sub-sample analysis.

Do Fixed Exchange Rates Induce More Fiscal Discipline

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Author : Mr.Yan Sun
language : en
Publisher: International Monetary Fund
Release Date : 2003-04-01

Do Fixed Exchange Rates Induce More Fiscal Discipline written by Mr.Yan Sun and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003-04-01 with Business & Economics categories.

Conventional wisdom has held that a fixed exchange rate regime induces more fiscal discipline, but Tornell and Velasco (1995, 1998) argue the opposite. Using a dynamic model with fragmented fiscal policymaking, this paper evaluates the two arguments in a single framework and shows that (1) future punishment against fiscal laxity exists under both fixed and flexible regimes; (2) fiscal authorities have a greater incentive to spend more today under fixed rates than under flexible rates; (3) in the presence of both factors above, fixed rates will induce more fiscal discipline only if the future punishment is sufficiently stronger than under flexible rates; and (4) neither fixed nor flexible rates could resolve the structural distortions caused by fragmented policymaking, and fiscal centralization needs to be undertaken to strengthen fiscal discipline.

The Choice Of Monetary And Exchange Rate Arrangements For A Small Open Low Income Economy

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Author :
language : en
Publisher:
Release Date : 2008

The Choice Of Monetary And Exchange Rate Arrangements For A Small Open Low Income Economy written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with Foreign exchange rates categories.

This paper assesses São Tomé and Príncipe's monetary and exchange rate arrangements in light of the country's monetary history and the relevant experience of comparable countries in Africa. The study highlights several structural characteristics of São Tomé and Príncipe including its very small size, high degree of openness, extensive use of foreign currencies, and inflexible product and factor markets in the consideration of an appropriate monetary and exchange regime. Firmly anchored currency arrangements, defined in this paper to include memberships in monetary unions or hard pegs, are found to be preferable to the status quo of a managed float. The paper applies statistical methods and takes into account other factors to identify the appropriate anchor currency. It stresses that fiscal discipline and prudent debt management are the main prerequisites for a firmly anchored currency arrangement.

The Political Economy Of Exchange Rate Regime Determination

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Author : Alena Kimakova
language : en
Publisher:
Release Date : 2009

The Political Economy Of Exchange Rate Regime Determination written by Alena Kimakova and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with categories.

This paper studies exchange rate regime choice from a positive perspective by modeling the interplay of monetary and fiscal policy, credibility and financial market microstructure as factors influencing the decision on de facto regime. The model shows how a small open economy reliant on foreign sources of financing is likely to opt for a stable regime. Furthermore, a stable political environment with a high degree of accountability is conducive to choosing a flexible regime. The findings suggest that flexible rather than fixed exchange rate regimes provide more fiscal discipline.

Introduction Of A New National Currency

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Author : Mr.Richard K. Abrams
language : en
Publisher: International Monetary Fund
Release Date : 1993-06

Introduction Of A New National Currency written by Mr.Richard K. Abrams and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1993-06 with Business & Economics categories.

In the last few years, a number of countries in the Former Soviet Union and Eastern Europe have become independent or regained their independence. Many have chosen to issue their own currencies and more are likely to do so. This paper draws on these and earlier experiences in order to summarize the main policy and institutional arrangements necessary for the introduction of a new currency and to discuss the key features of, and procedures for, the conversion. The paper is designed as a working document for those involved with currency reforms to help ensure that all the necessary steps are taken prior to, during, and immediately after the introduction of a new currency. The body of the paper is in four parts. First, the main macroeconomic and operational measures required to prepare for the orderly transition to the new currency are discussed, including decisions regarding the choice of exchange regime, the issuance of coupons and the costs and benefits of currency reforms. The next section covers issues relating to the production of the new currency bank notes. Next, the main features and terms of the conversion are discussed, as well as certain special issues such as speculative inflows and the treatment of banks’ customers and old currency contracts. The last section covers the operation of the foreign exchange market and maintenance of exchange rate stability in the period immediately following the introduction of the new currency. The appendix covers the technical aspects of currency handling, accounting and management.

The Choice Of Monetary And Exchange Rate Arrangements For A Small Open Low Income Economy The Case Of Sao Tome And Principe

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Author : Márcio Valério Ronci
language : en
Publisher: INTERNATIONAL MONETARY FUND
Release Date : 2008-05-01

The Choice Of Monetary And Exchange Rate Arrangements For A Small Open Low Income Economy The Case Of Sao Tome And Principe written by Márcio Valério Ronci and has been published by INTERNATIONAL MONETARY FUND this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008-05-01 with categories.

This paper assesses São Tomé and Príncipe's monetary and exchange rate arrangements in light of the country's monetary history and the relevant experience of comparable countries in Africa. The study highlights several structural characteristics of São Tomé and Príncipe including its very small size, high degree of openness, extensive use of foreign currencies, and inflexible product and factor markets in the consideration of an appropriate monetary and exchange regime. Firmly anchored currency arrangements, defined in this paper to include memberships in monetary unions or hard pegs, are found to be preferable to the status quo of a managed float. The paper applies statistical methods and takes into account other factors to identify the appropriate anchor currency. It stresses that fiscal discipline and prudent debt management are the main prerequisites for a firmly anchored currency arrangement.

Too Sensational

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Author : W. Max Corden
language : en
Publisher: MIT Press
Release Date : 2004-08-20

Too Sensational written by W. Max Corden and has been published by MIT Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004-08-20 with Business & Economics categories.

Most of the literature on exchange rate regimes has focused on the developed countries. Since the recent crises in emerging markets, however, attention has shifted to the choice of exchange rate regimes for developing countries, especially those that are more integrated into the world capital markets. In Too Sensational, W. Max Corden presents a systematic and accessible overview of the choice of exchange rate regimes. Reviewing many types of regimes, he shows how the choice of an exchange rate regime is related to both fiscal policy and trade policy. Building on the theory of optimum currency areas, Corden develops an analytic framework of three approaches (nominal anchor, real targets, and exchange rate stability) and three polar exchange rate regimes (absolutely fixed, pure floating, and fixed but adjustable). He considers all other regimes to be mixtures of two or three of the polar regimes. Beginning with theory and later turning to case studies of countries in Asia, Europe, and Latin America, Corden focuses on how economies react to negative and positive shocks under various exchange rate regimes. He examines in particular the Asian and Latin American currency crises of the 1990s. He concludes that although "too sensational" crises have discredited fixed but adjustable regimes, the extremes of absolutely fixed regimes or pure floating regimes need not be chosen.