Download or read book Real Exchange Rates and Inflation in Exchange rate Based Stabilizations written by Steven Kamin and published by . This book was released on 1996 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Real Exchange Rates and Inflation in Exchange Rate Based Stabilizations written by Steven B. Kamin and published by . This book was released on 1998 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Considerable research has focused on explaining why currencies appreciate in real terms after the nominal exchange rate is stabilized, but this research generally has taken a theoretical approach, and rarely has tested its hypotheses empirically. In this paper I estimate a simple error-correction model for Mexico, based on the Salter-Swan framework, in which inflation is determined by (1) the gap between the actual real exchange rate and the exchange rate that clears the market for non-traded goods, and (2) persistence effects of past inflation. Using the model, I decompose the excess of Mexican inflation in 1988-94 over peso-adjusted international inflation rates--that is, the real appreciation of the peso--into that part attributable to the initial undervaluation of the peso, that part explained by the subsequent expansion of domestic demand, and that part attributable to inertial inflation. The results indicate that the effects of inertial inflation in appreciating the real exchange rate were quite temporary, lasting only about a year after the stabilization of the peso in 1988. Of the real appreciation that took place between 1988 and 1994, about half was attributable to the expansion of domestic demand--which appreciated the equilibrium real exchange rate in the non-tradeables sector--and about half reflected the correction of the initial undervaluation of the real exchange rate relative to its equilibrium level in the non-tradeables sector. Finally, the paper uses the model to illustrate the impact of various prospective exchange rate policies on inflation and the real exchange rate in Mexico.

Download or read book Exchange Rate Policy the Real Exchange Rate and Inflation written by Miguel Alberto Kiguel and published by World Bank Publications. This book was released on 1992 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Exchange Rate Based Stabilization under Imperfect Credibility written by Mr.Guillermo Calvo and published by International Monetary Fund. This book was released on 1991-08-01 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Exchange Rate Based Stabilization written by Mr.A. Javier Hamann and published by International Monetary Fund. This book was released on 1999-10-01 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Do exchange-rate-based stabilizations generate distinctive economic dynamics? To address this question, this paper identifies stabilization episodes using criteria that differ from those in previous empirical studies of exchange-rate-based stabilizations. We find that, while some differences can be detected between exchange-rate-based stabilizations and stabilizations where the exchange rate is not the anchor, the behavior of important variables does not appear to differ—especially output growth, which is good in both cases. There is also no evidence that fiscal discipline is enhanced by adopting an exchange-rate anchor, or that there are any systematic differences in the success records of stabilizations that use the exchange rate as a nominal anchor and those that do not.

Download or read book Credibility and the Dynamics of Stabilization Policy written by Mr.Guillermo Calvo and published by International Monetary Fund. This book was released on 1990-11-01 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Sticky Inflation and the Real Effects of Exchange Rate Based Stabilization written by Oya Celasun and published by International Monetary Fund. This book was released on 2003-07-01 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: Exchange rate-based inflation stabilization (ERBS) policies are associated with a boom-recession cycle in economic activity and sustained real exchange rate appreciation. A class of models in the literature has explained these empirical regularities with the lack of credibility of the stabilization plans. The lack-of-credibility models typically assume perfectly forward-looking pricing behavior without inflation stickiness and attribute the slow decline in inflation to the consumption boom that occurs due to the perceived temporariness of the ERBS policy. This paper tests the empirical validity of forward-looking pricing behavior in Mexico and Turkey, two countries which have experienced ERBS. It finds that the forward- and backward-looking components of inflation weigh approximately equally in pricing behavior, and therefore, that inflation is partially sticky. The paper then develops the theoretical implications of partial inflation stickiness in a lack of credibility model of ERBS and concludes that the presence of stickiness significantly reduces the persistence of the consumption boom predicted by the model, but helps to explain the recession in the late phase of the stabilization.

Download or read book Distribution Costs and Real Exchange Rate Dynamics During Exchange Rate based Stabilization written by Ariel T. Burstein and published by . This book was released on 2001 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Targeting the Real Exchange Rate written by Guillermo Calvo and published by International Monetary Fund. This book was released on 1994-02 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Exchange Rates and Inflation written by Rudiger Dornbusch and published by MIT Press. This book was released on 1988 with total page 490 pages. Available in PDF, EPUB and Kindle. Book excerpt: Collected for the first time in Exchange Rates and Inflation, twenty-two articles are gathered in four parts covering exchange rate theory, special topics in exchange rate economics, equilibrium real exchange rates, and inflation and stabilization.

Download or read book Inflation Stabilization and Nominal Anchors written by Guillermo Calvo and published by . This book was released on 1992 with total page 86 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Distribution Costs and Real Exchange Rate Dynamics During Exchange rate based stabilizations written by Ariel T. Burstein and published by . This book was released on 2000 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies the role played by the distribution sector in shaping the behavior of the real exchange rate during exchange-rate-based-stabilizations. We use data for the U.S. and Argentina to document the importance of distribution margins in retail prices and disaggregated price data to study price dynamics in the aftermath of Argentina's 1991 Convertibility plan. Distribution services require local labor and land so they drive a natural wedge between retail prices in different countries. We study in detail the impact of introducing a distribution sector in an otherwise standard model of exchange-rate-based-stabilizations. We show that this simple extension improves dramatically the ability of the model to rationalize observed real exchange rate dynamics.

Download or read book Exchange Rate Uncertainty in Money Based Stabilization Programs written by Mr.R. Armando Morales and published by International Monetary Fund. This book was released on 1998-01-01 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Exchange Rate Based Stabilization in Western Europe written by Ms.Enrica Detragiache and published by International Monetary Fund. This book was released on 1997-06-01 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Exchange Rate Based Stabilization in Argentina and Chile written by Miguel Alberto Kiguel and published by World Bank Publications. This book was released on 1994 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: Exchange- rate- based stabilization programs supported by a sustained fiscal adjustment generally reduced long- term inflation. Success was not easy, however, because rigid adherence to the exchange rate rule many times resulted in strong overvaluation of the currency and balance- of- payments problems before stabilization was finally secured.

Download or read book Real Effects of Exchange rate based Stabilization written by Sergio Rebelo and published by . This book was released on 1995 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses a unified analytical framework to assess, both qualitatively and quantitatively, the relevance of the different hypotheses that have been proposed to explain the real effects of exchange rate-based stabilizations. The four major hypotheses analyzed are: (i) the supply-side effects associated with an inflation decline; (ii) the perception that the exchange rate peg is temporary; (iii) the fiscal adjustments that tend to accompany the peg; and (iv) the existence of nominal rigidities in wages or prices.

Download or read book Exchange rate Based Inflation Stabilization written by Martín Uribe and published by . This book was released on 1995 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: