Download or read book Optimal and Sustainable Exchange Rate Regimes written by Masahiro Kawai and published by International Monetary Fund. This book was released on 1992-11-01 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the question of how to design an optimal and sustainable exchange rate regime in a world economy of two interdependent countries. It develops a Barro-Gordon type two-country model and compares noncooperative equilibria under different assumptions of monetary policy credibility and different exchange rate regimes. Using a two-stage game approach to the strategic choice of policy instruments, it identifies optimal (in a Pare to sense) and sustainable (self-enforcing) exchange rate regimes. The theoretical results indicate that the choice of such regimes depends fundamentally on the credibility of monetary policy commitments by the two countries’ authorities. The nature of shocks to the economies and the substitutability between goods produced in the two countries also play some role. International coordination on instrument choice is necessary to design optimal and sustainable exchange rate regimes.
Download or read book Optimal and Sustainable Exchange Rate Regimes written by United Nations. Economic Commission for Africa and published by . This book was released on 1994 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Exchange Rate Regime Choice written by Mr.Robert P. Flood and published by International Monetary Fund. This book was released on 1991-09-01 with total page 9 pages. Available in PDF, EPUB and Kindle. Book excerpt: Traditionally the choice of exchange rate regime has been seen as a second-best policy choice, which can be directed toward mitigating the distortionary effects of price or information rigidities. In this paradigm the optimal degree of exchange rate flexibility is found to depend of the source and nature of shocks hitting an economy. More recent literature views the exchange rate as a widely and frequently seen manifestation of government policy with careful exchange-rate management emerging as a tool that can enhance shaky policy credibility.
Download or read book Evolution and Performance of Exchange Rate Regimes written by Mr.Kenneth Rogoff and published by International Monetary Fund. This book was released on 2003-12-01 with total page 85 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using recent advances in the classification of exchange rate regimes, this paper finds no support for the popular bipolar view that countries will tend over time to move to the polar extremes of free float or rigid peg. Rather, intermediate regimes have shown remarkable durability. The analysis suggests that as economies mature, the value of exchange rate flexibility rises. For countries at a relatively early stage of financial development and integration, fixed or relatively rigid regimes appear to offer some anti-inflation credibility gain without compromising growth objectives. As countries develop economically and institutionally, there appear to be considerable benefits to more flexible regimes. For developed countries that are not in a currency union, relatively flexible exchange rate regimes appear to offer higher growth without any cost in credibility.
Download or read book Optimal and Sustainable Exchange Rate Regimes written by Masahiro Kawai and published by . This book was released on 1992 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Monetary Policy and Exchange Rates written by Liliana Rojas-Suarez and published by . This book was released on 2015 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: Is there an optimal monetary/exchange rate system for Latin America? An analysis of the evidence leads us to conclude that "one size does not fit all", but that with the exception of a few countries, more rather than less exchange rate flexibility is desired. However, facing a set of constraints particular to Latin America, "pure flexibility" is not the right choice. Inflation targeting combined with managed floating, involving clear and limited instances for intervention in the foreign exchange market, appears to be an appropriate choice for most of the region's countries, at least in the short run. Accumulation of foreign liquidity in the banking sector and in government-managed funds is also a necessary complement. The true long-term challenge, however, lies in removing the constraints that limit the options of viable exchange rate regimes.
Download or read book Determinants of an Optimal Exchange Rate Regime written by Hyung-Cheol Shin and published by . This book was released on 2005 with total page 266 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Exchange Rate Regime Transitions written by Paul R. Masson and published by . This book was released on 2000 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: Some have argued that the only sustainable regimes are free floating and hard exchange rate commitments--essentially currency boards or monetary unions (Eichengreen, 1994, 1998; Obstfeld and Rogoff, 1995). For instance, Eichengreen (1994, pp. 4-5) says that ..". contingent policy rules to hit explicit exchange rate targets will no longer be viable in the twenty-first century ... Countries ... will be forced to choose between floating exchange rates on the one hand and monetary unification on the other." Similarly, Obstfeld and Rogoff (1995, pp. 74) state ..". there is little, if any, comfortable middle ground between floating rates and the adoption of a common currency." Hence, in the view of these authors, in the future we will see a disappearance of the middle ground that corresponds to soft commitments to some sort of intermediate exchange rate regime--adjustable pegs, crawling pegs, or bands, and perhaps also managed floating. This view is sometimes called the "two poles" or "hollowing out" (e.g., Eichengreen, 1994, pp. 6) theory of exchange rate regimes, and is based on the observation that higher capital mobility makes exchange rate commitments increasingly fragile. However, like the optimal currency area literature, which is essentially static, an explicit or implicit assumption is made that regimes are chosen to last forever, and from this perspective, one would only choose a regime that could be sustained once and for all. Only the hardest peg and the absence of any exchange rate commitment whatsoever are likely to qualify on that basis. Thus Eichengreen (1994, pp. 5), states "This will rule out the maintenance for extended periods of pegged but adjustable exchange rates, crawling pegs, and other regimes in which governments pre-announce limits on exchange rate fluctuations ..." (italics added).
Download or read book Exchange Rate Determination and Optimal Economic Policy Under Various Exchange Rate Regimes written by Eelke De Jong and published by . This book was released on 2014-09-01 with total page 284 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book IMF Staff papers written by International Monetary Fund. Research Dept. and published by International Monetary Fund. This book was released on 1993-01-01 with total page 256 pages. Available in PDF, EPUB and Kindle. Book excerpt: The relationship between the degree of wage indexation chosen by private agents and the degree of public debt indexation chosen by the government is examined. It is shown that the government is likely to increase public debt indexation in response to an increase in wage indexation. By contrast, higher public debt indexation has an ambiguous effect on wage indexation. In equilibrium, wage and public debt indexation may be positively or negatively related. This relationship is analyzed in situations where the policymakers can precommit to policies and in those they cannot.
Download or read book The Optimal Choice of Exchange rate Regime written by Michael B. Devereux and published by . This book was released on 1999 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the choice of exchange-rate regime fixed or floating in a dynamic, intertemporal general equilibrium framework. Our framework extends Devereux and Engel (1998) by investigating the implications of internationalized production. We examine the role of price-setting -- whether prices are set in the currency of producers or the currency of consumers in determining the optimality of exchange-rate regimes in an environment of uncertainty created by monetary shocks. We find that when prices are set in producers' currencies, floating exchange rates are preferred when the country is large enough, or not too risk averse. On the other hand, floating exchange rates are always preferred when prices are set in consumers' currencies because floating exchange rates allow domestic consumption to be insulated from foreign monetary shocks. The gains from floating exchange rates are greater when there is internationalized production in this case
Download or read book The Collapse of Exchange Rate Regimes written by George S. Tavlas and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 247 pages. Available in PDF, EPUB and Kindle. Book excerpt: ical) and to self-fulfilling currency crisis, respectively. Research stressing the former approach was pioneered by Krugman (1979) and Flood and Garber (1984). According to this line of research, the failure of governments to adopt domestic monetary and fiscal policies consistent with their stated exchange rate targets leads to a gradual diminution of reserves and eventually a stock adjustment that depletes reserves suddenly in one attack (Sachs, Tornell, and Velasco, 1996, page 47). The result is either a devaluation of the exchange rate or a switch to floating. Subsequent work of this genre has specified a number of other channels, in addition to that involving inconsistent and unsustainable monetary and fiscal policies, that can precipitate an attack: 1. Inconsistency between external and internal objectives. The stances of monetary and fiscal policies may be consistent with the authorities' exchange rate target, but domestic economic indicators (such as the unemployment rate) may be inconsistent with internal balance, resulting in pressures on the authorities to relax macroeconomic policies. Private agents, aware of this inconsistency, perceive an opportunity for profits from a currency devaluation and precipitate an attack. 2. Contagion effects. Prior to an attack on another currency (say that of country B), the market may view a country's (say, country A's) exchange rate as consistent with economic fundamentals and, thus, sustainable.
Download or read book Exchange Rate Regimes written by Atish R. Ghosh and published by MIT Press. This book was released on 2002 with total page 252 pages. Available in PDF, EPUB and Kindle. Book excerpt: An empirical study of exchange rate regimes based on data compiled from 150 member countries of the International Monetary Fund over the past thirty years. Few topics in international economics are as controversial as the choice of an exchange rate regime. Since the breakdown of the Bretton Woods system in the early 1970s, countries have adopted a wide variety of regimes, ranging from pure floats at one extreme to currency boards and dollarization at the other. While a vast theoretical literature explores the choice and consequences of exchange rate regimes, the abundance of possible effects makes it difficult to establish clear relationships between regimes and common macroeconomic policy targets such as inflation and growth. This book takes a systematic look at the evidence on macroeconomic performance under alternative exchange rate regimes, drawing on the experience of some 150 member countries of the International Monetary Fund over the past thirty years. Among other questions, it asks whether pegging the exchange rate leads to lower inflation, whether floating exchange rates are associated with faster output growth, and whether pegged regimes are particularly prone to currency and other crises. The book draws on history and theory to delineate the debate and on standard statistical methods to assess the empirical evidence, and includes a CD-ROM containing the data set used.
Download or read book Fixed Vs Floating Exchange Rates written by Michael B. Devereux and published by . This book was released on 1998 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the welfare properties of fixed and floating exchange rate regimes in a two-country, dynamic, infinite-horizon model with agents optimizing in an environment of uncertainty created by monetary shocks. The optimal exchange rate regime may depend on whether prices are set in the currency of producers or the currency of consumers. When prices are set in consumers' currency, the variance of home consumption is not influenced by foreign monetary variance under floating exchange rates, while there is transmission of foreign disturbances under floating rates if prices are set in producers' currencies, or under fixed exchange rates. An important feature of the model is the exchange rate regime affects not just the variance of consumption and output, but also their average levels. When prices are set in producer's currency, as in the traditional framework, we find that there is a trade-off between floating and fixed exchange rates. Exchange rate adjustment under floating rates allows for a lower variance of consumption, but exchange rate volatility itself leads to a lower average level of consumption. When prices are set in consumer's currency, floating exchange rates always dominate fixed exchange rates.
Download or read book The Political Choice of the Optimal Exchange Rate Regime written by L. J. Ruland and published by . This book was released on 1992 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Optimal Currency Areas written by Willem H. Buiter and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Exchange Rate Regimes and Macroeconomic Stability written by Lok Sang Ho and published by Springer Science & Business Media. This book was released on 2011-06-28 with total page 258 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Asian crisis of 1997-1998 was a major influence on macroeconomic thinking concerning exchange rate regimes, the functioning of international institutions, such as the IMF and the World Bank, and international contagion of macroeconomic instability from one country to another. Exchange Rate Regimes and Macroeconomic Stability offers perspectives on these issues from the viewpoints of two Nobel Laureates, an IMF economist, and Asian economists. This book contributes new ideas to the ongoing debate on the role of domestic monetary authorities and international institutions in reducing the likelihood of international financial crises, as well as the problems associated with various exchange rate regimes from the standpoint of macroeconomic stability. Overall, the chapters contained in this volume offer interesting perspectives, which have been stimulated by the recent events in the foreign exchange market. They provide a useful reference for anyone interested in the development of exchange rate regimes, and represent considerable reflection by economists half a century after Bretton Woods.
