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The Behavior Of Real Interest Rates In Exchange Rate Based Stabilization Programs
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Book Synopsis The Behavior of Real Interest Rates in Exchange-Rate Based Stabilization Programs by : Pierre-Richard Agénor
Download or read book The Behavior of Real Interest Rates in Exchange-Rate Based Stabilization Programs written by Pierre-Richard Agénor and published by International Monetary Fund. This book was released on 1994-06-01 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis The Behavior of Real Interest Rates in Exchange-Rate-Based Stabilization Programs by : Pierre-Richard Agenor
Download or read book The Behavior of Real Interest Rates in Exchange-Rate-Based Stabilization Programs written by Pierre-Richard Agenor and published by . This book was released on 2004 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis The behavior of real interest rates in exchange-rate based stabilization programs by : Fondo Monetario Internacional
Download or read book The behavior of real interest rates in exchange-rate based stabilization programs written by Fondo Monetario Internacional and published by . This book was released on 1994 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The BEHAVIOR OF REAL INTEREST RATES IN EXCHANGE-RATE BASED STABILIZATION PROGRAM. by : Pierre-Richard Agenor
Download or read book The BEHAVIOR OF REAL INTEREST RATES IN EXCHANGE-RATE BASED STABILIZATION PROGRAM. written by Pierre-Richard Agenor and published by . This book was released on 1994 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Exchange-Rate-Based Stabilization under Imperfect Credibility by : Mr.Guillermo Calvo
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.
Book Synopsis Credibility and the Dynamics of Stabilization Policy by : Mr.Guillermo Calvo
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.
Book Synopsis Exchange Rate Uncertainty in Money-Based Stabilization Programs by : Mr.R. Armando Morales
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.
Book Synopsis Exchange-Rate-Based Stabilazation by : Alberto F. Ades
Download or read book Exchange-Rate-Based Stabilazation written by Alberto F. Ades and published by World Bank Publications. This book was released on 1993 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Exchange-Rate-Based Stabilization by : Mr.A. Javier Hamann
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.
Book Synopsis Exchange Rate-Based Stabilization in Western Europe by : Ms.Enrica Detragiache
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.
Book Synopsis Sticky Inflation and the Real Effects of Exchange Rate Based Stabilization by : Oya Celasun
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 with total page 40 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.
Book Synopsis NBER Macroeconomics Annual 1995 by : Ben S. Bernanke
Download or read book NBER Macroeconomics Annual 1995 written by Ben S. Bernanke and published by MIT Press. This book was released on 1996 with total page 364 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Real Effects of Exchange-rate-based Stabilization by : Sergio Rebelo
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.
Book Synopsis Interest Rate Rules, Inflation Stabilization, and Imperfect Credibility by : Guillermo A. Calvo
Download or read book Interest Rate Rules, Inflation Stabilization, and Imperfect Credibility written by Guillermo A. Calvo and published by . This book was released on 2010 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper examines the robustness of Interest Rate Rules, IRRs, in the context of an imperfectly credible stabilization program, closely following the format of much of the literature in open-economy models, e.g., Calvo and Veacute;gh (1993 and 1999). A basic result is that IRRs, like Exchange Rate Based Stabilization, ERBS, programs, could give rise to macroeconomic distortion, e.g., underutilization of capacity and real exchange rate misalignment. However, while under imperfect credibility EBRS is associated with overheating and current account deficits, IRRs give rise to somewhat opposite results. Moreover, the paper shows that popular policies to counteract misalignment, like Strategic Foreign Exchange Market Intervention or Controls on International Capital Mobility may not be effective or could even become counterproductive. The bottom line is that the greater exchange rate flexibility granted by IRRs is by far not a sure shot against the macroeconomic costs infringed by imperfect credibility.
Book Synopsis Habit Formation and the Comovement of Prices and Consumption During Exchange-rate-based Stabilization Programs by : Martín Uribe
Download or read book Habit Formation and the Comovement of Prices and Consumption During Exchange-rate-based Stabilization Programs written by Martín Uribe and published by . This book was released on 1997 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Stopping High Inflation by : Carlos A. Végh Gramont
Download or read book Stopping High Inflation written by Carlos A. Végh Gramont and published by International Monetary Fund. This book was released on 1991-11 with total page 74 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Real Exchange Rates and Inflation in Exchange-rate Based Stabilizations by : Steven Kamin
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:
