The Behavior Of Real Interest Rates In Exchange Rate Based Stabilization Programs
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The Behavior Of Real Interest Rates In Exchange Rate Based Stabilization Programs
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Author : Pierre-Richard Agénor
language : en
Publisher: International Monetary Fund
Release Date : 1994-06-01
The Behavior Of Real Interest Rates In Exchange Rate Based Stabilization Programs written by Pierre-Richard Agénor 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 1994-06-01 with Business & Economics categories.
This paper examines the behavior of real interest rates in exchange-rate based stabilization programs. The analysis is based on a model with imperfect capital mobility and optimizing agents. A permanent reduction in the devaluation rate is first shown to have an ambiguous effect on real interest rates on impact. The analysis is then extended to consider a stabilization program characterized by an initial reduction in the rate of devaluation of the nominal exchange rate, and the announcement of a future increase in income taxes. The impact effect on real interest rates is shown to depend upon the degree of credibility of the announcement. Real interest rates may fall if agents do not believe that taxes will be raised, and rise if the future tax reform is sufficiently credible.
Exchange Rate Based Stabilization Under Imperfect Credibility
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Author : Mr.Guillermo Calvo
language : en
Publisher: International Monetary Fund
Release Date : 1991-08-01
Exchange Rate Based Stabilization Under Imperfect Credibility written by Mr.Guillermo Calvo 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 1991-08-01 with Business & Economics categories.
This paper analyzes stabilization policy under predetermined exchange rates in a cash-in-advance, staggered-prices model. Under full credibility, a reduction in the rate of devaluation results in an immediate and permanent reduction in the inflation rate, with no effect on output or consumption. In contrast, a non-credible stabilization results in an initial expansion of output, followed by a later recession. The inflation rate of home goods remains above the rate of devaluation throughout the program, thus resulting in a sustained real exchange rate appreciation.
Working Paper Summaries Wp 94 1 Wp 94 76
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Author : International Monetary Fund
language : en
Publisher: International Monetary Fund
Release Date : 1994-08-01
Working Paper Summaries Wp 94 1 Wp 94 76 written by International Monetary Fund 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 1994-08-01 with Business & Economics categories.
The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
Credibility And The Dynamics Of Stabilization Policy
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Author : Mr.Guillermo Calvo
language : en
Publisher: International Monetary Fund
Release Date : 1990-11-01
Credibility And The Dynamics Of Stabilization Policy written by Mr.Guillermo Calvo 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 1990-11-01 with Business & Economics categories.
This paper studies price stabilization policy under both predetermined and flexible exchange rates. Under predetermined exchange rates, a non-credible stabilization program results in an initial expansion of output, followed by a later recession. The initial expansion accompanies an appreciating real exchange rate. Under flexible exchange rates, the recession occurs at the beginning of the program. The real exchange rate appreciates sharply on impact but depreciates afterwards. Lack of credibility is more costly under predetermined exchange rates because the real effects are more pronounced.
The Behavior Of Real Interest Rates In Exchange Rate Based Stabilization Programs
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Author : Pierre-Richard Agenor
language : en
Publisher:
Release Date : 2004
The Behavior Of Real Interest Rates In Exchange Rate Based Stabilization Programs written by Pierre-Richard Agenor and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with categories.
This paper examines the behavior of real interest rates at the inception of exchange-rate-based stabilization programs. The analysis is based on an optimizing model of a small open economy facing imperfect world capital markets. A reduction in the devaluation rate is shown to have a positive impact on real interest rates. By contrast, a program characterized by an initial reduction in the devaluation rate and a perceived future increase in government spending has an ambiguous effect - which depends in particular on the degree of credibility of the fiscal policy stance.
Exchange Rate Based Stabilazation
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Author : Alberto F. Ades
language : en
Publisher: World Bank Publications
Release Date : 1993
Exchange Rate Based Stabilazation written by Alberto F. Ades and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 1993 with Danmark categories.
In high inflation economies exchange- rate- based stabilizations typically start with a boom, with the recession coming later. In contrast, in similar programs in the moderate inflation European economies, the recession generally appears upfront. When such programs result in a boom, it is driven by different forces than in the high inflation economies.
The Business Cycle Associated With Exchange Rate Based Stabilization
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Author : Miguel Alberto Kiguel
language : en
Publisher: World Bank Publications
Release Date : 1990
The Business Cycle Associated With Exchange Rate Based Stabilization written by Miguel Alberto Kiguel and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 1990 with Business cycles categories.
Disinflation programs in chronic inflation countries do not normally follow the usual Phillips curve tradeoff in the medium run. Instead of having a sharp recession in the early stage of stabilization, there often is an initial expansion of output followed by a recession and balance of payments difficulties. This pattern is related to programs that use the exchange rate as an instrument of disinflation.
Exchange Rate Based Stabilization In Western Europe
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Author : Ms.Enrica Detragiache
language : en
Publisher: International Monetary Fund
Release Date : 1997-06-01
Exchange Rate Based Stabilization In Western Europe written by Ms.Enrica Detragiache 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 1997-06-01 with Business & Economics categories.
This paper compares the experience with exchange-rate–based stabilization (ERBS) of four Western European countries with that of high-inflation developing countries. In general, the behavior of key macroeconomic variables—inflation, output, demand, the real exchange rate and the current account—in the four countries examined did not correspond to the pattern observed in developing countries, although some resemblance to this pattern could be found in Italy in 1987–92 and Greece in 1994–96. The experience with ERBS in Western Europe highlights the importance of incomes policy as an ingredient of a successful stabilization program and shows that the adoption of a looser anchor does not necessarily reduce the output cost of disinflation.
Exchange Rate Uncertainty In Money Based Stabilization Programs
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Author : Mr.R. Armando Morales
language : en
Publisher: International Monetary Fund
Release Date : 1998-01-01
Exchange Rate Uncertainty In Money Based Stabilization Programs written by Mr.R. Armando Morales 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 1998-01-01 with Business & Economics categories.
Complementing the explanation provided by Calvo and Vegh (1994) for money-based stabilization programs, exchange rate uncertainty introduced to a particular version of the portfolio approach with imperfect competition in the banking system leads to a bias toward appreciation that is directly related to the divergence of expectations and that dampens the interaction between portfolio movements and the real exchange rate. Based on Frankel-Froot, uncertainty exists when the fundamental equilibrium real exchange rate is temporarily unknown in a foreign exchange market with two types of agents: ‘parity-guessers,’ who expect a jump to a reference parity level, and ‘money-followers,’ who expect nominal depreciation equal to the monetary rule.
Nber Macroeconomics Annual 1995
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Author : Ben S. Bernanke
language : en
Publisher: MIT Press
Release Date : 1996
Nber Macroeconomics Annual 1995 written by Ben S. Bernanke and has been published by MIT Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 1996 with Business & Economics categories.
Contents : Wage Inequality and Regional Unemployment Persistence: U.S. vs. Europe, Guiseppe BErtola and Andreas Ichino. Capital Utilization and Returns to Scale, Craig Burnside, Martin Eichenbaum, and Sergio Rebelo. Banks and Derivatives, Gary Gorton and Richard Rosen. Exchange-Rate-Based Stabilizations: Theory and Evidence, Sergio Rebelo and Carlos Vegh. Inflation Indicators and Inflation Policy, Stephen Cecchetti. Recent Central Bank Reforms and the Role of Price Stability as the Sole Objective of Monetary Policy, Carl Walsh. Is Central Bank Independence (and Low Inflation) the Result of Effective Financial Opposition to Inflation?, Adam Posen. The Unending Quest for Monetary Salvation, Stanley Fischer.