The Choice Of An Optimal Exchange Rate System For A Small Country
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Author | : Iltae Son |
Publisher | : |
Total Pages | : 186 |
Release | : 1985 |
Genre | : Foreign exchange |
ISBN | : |
Download The Choice of an Optimal Exchange Rate System for a Small Country Book in PDF, Epub and Kindle
Author | : Mr.Robert P. Flood |
Publisher | : International Monetary Fund |
Total Pages | : 9 |
Release | : 1991-09-01 |
Genre | : Business & Economics |
ISBN | : 1451851324 |
Download Exchange Rate Regime Choice Book in PDF, Epub and Kindle
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.
Author | : Masahiro Kawai |
Publisher | : International Monetary Fund |
Total Pages | : 44 |
Release | : 1992-11-01 |
Genre | : Business & Economics |
ISBN | : 1451852320 |
Download Optimal and Sustainable Exchange Rate Regimes Book in PDF, Epub and Kindle
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.
Author | : International Monetary Fund |
Publisher | : International Monetary Fund |
Total Pages | : 406 |
Release | : 1990-09-15 |
Genre | : Business & Economics |
ISBN | : |
Download Choosing an Exchange Rate Regime Book in PDF, Epub and Kindle
Contiene: Introduction; Choice of exchange rate regime for a smaller economy: a survey of some key issues; Financial market integration and exchange rate policy; Exchange rate experiences of small EMS countries: Belgium, Denmark, and the Netherlands; Exchange rate policy, inflation, and unemployment: the Nordic EFTA countries; Exchange rate policy in advanced commodity-exporting countries: Australia and New Zealand; Credibility and asymmetries in the EMS; Fiscal contraints of a fixed exchange rate regime; Postscript: exchange rate policy in Canada.
Author | : Seppo Honkapohja |
Publisher | : |
Total Pages | : 56 |
Release | : 1992 |
Genre | : Foreign exchange |
ISBN | : |
Download Country Characteristics and the Choice of the Exchange Rate Regime Book in PDF, Epub and Kindle
Author | : Silke Fabian |
Publisher | : Springer Science & Business Media |
Total Pages | : 175 |
Release | : 2012-12-06 |
Genre | : Business & Economics |
ISBN | : 3642500293 |
Download Exchange Rate Management in Interdependent Economies Book in PDF, Epub and Kindle
With the breakdown of the Bretton Woods System and the begin of floating between the major currencies, central banks have been formally freed from their obligations to defend the fixed parities of bilateral exchange rates. Nev ertheless, since then there have been countless occasions on which monetary authorities have officially intervened in the foreign exchange market. More over, numerous studies indicate that exchange rates have been much more variable than originally anticipated - in real and in nominal, as well as in short run and longer run measures (see for example Hesse and Braasch [1989] and Marston [1988]). Through the experience of high real sector costs, the topic of optimal exchange rate management soon reentered policy discussions. The term exchange rate management encompasses both the choice of ex change rate regime as well as active intervention policies within the given 1 system. Much of the recent policy discussion has focussed on the first issue, in particular proposals of how to reform the present international monetary order. And new systems such as the European Monetary System (EMS) have emerged for subgroups of countries. However, the question of finding the optimal system has not yet been resolved.
Author | : Camila Casas |
Publisher | : International Monetary Fund |
Total Pages | : 62 |
Release | : 2017-11-22 |
Genre | : Business & Economics |
ISBN | : 1484330609 |
Download Dominant Currency Paradigm: A New Model for Small Open Economies Book in PDF, Epub and Kindle
Most trade is invoiced in very few currencies. Despite this, the Mundell-Fleming benchmark and its variants focus on pricing in the producer’s currency or in local currency. We model instead a ‘dominant currency paradigm’ for small open economies characterized by three features: pricing in a dominant currency; pricing complementarities, and imported input use in production. Under this paradigm: (a) the terms-of-trade is stable; (b) dominant currency exchange rate pass-through into export and import prices is high regardless of destination or origin of goods; (c) exchange rate pass-through of non-dominant currencies is small; (d) expenditure switching occurs mostly via imports, driven by the dollar exchange rate while exports respond weakly, if at all; (e) strengthening of the dominant currency relative to non-dominant ones can negatively impact global trade; (f) optimal monetary policy targets deviations from the law of one price arising from dominant currency fluctuations, in addition to the inflation and output gap. Using data from Colombia we document strong support for the dominant currency paradigm.
Author | : L. J. Ruland |
Publisher | : |
Total Pages | : 34 |
Release | : 1992 |
Genre | : |
ISBN | : |
Download The Political Choice of the Optimal Exchange Rate Regime Book in PDF, Epub and Kindle
Author | : Michael B. Devereux |
Publisher | : |
Total Pages | : 66 |
Release | : 1998 |
Genre | : Consumption (Economics) |
ISBN | : |
Download Fixed Vs. Floating Exchange Rates Book in PDF, Epub and Kindle
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.
Author | : Charles Engel |
Publisher | : |
Total Pages | : 68 |
Release | : 2000 |
Genre | : Foreign exchange administration |
ISBN | : |
Download Optimal Exchange Rate Policy Book in PDF, Epub and Kindle
This paper examines optimal exchange-rate policy in two-country sticky-price general equilibrium models in which households and firms optimize over an infinite horizon in an environment of uncertainty. The models are in the vein of the new open-economy macroeconomics' as exemplified by Obstfeld and Rogoff (1995, 1998, 2000). The conditions under which fixed or floating exchange rates yield higher welfare depend on the exact nature of price stickiness and on the degree of risk-sharing opportunities. This paper presents some preliminary empirical evidence on the behavior of consumer prices in Mexico that suggests failures of the law of one price are important. The evidence on price setting and risk-sharing opportunities is not refined enough to make definitive conclusions about the optimal exchange-rate regime for that country.