Macroeconomic Implications of Real Exchange Rate Targeting in Developing Countries
Summary:
This paper analyzes the macroeconomic effects of a variety of exogenous and policy-induced real disturbances when the authorities target the level of the real exchange rate. It first discusses the implications--particularly for inflation and the current account--of targeting the rate at an “overdepreciated” level. The paper then examines the dynamic response of both output and inflation to a number of shocks. Further applications of the model, particularly as regards fiscal explanations of inflation, high-inflation plateaus, and money-based stabilization programs, are also considered.
Series:
Working Paper No. 1991/029
Subject:
Conventional peg Foreign exchange Inflation International trade Labor Prices Real exchange rates Real wages Terms of trade
Notes:
Analyzes the macroeconomic effects of a variety of exogenous and policy-induced real disturbances when the authorities target the level of the real exchange rate. Also published in Staff Papers, Vol. 38, No. 4, December 1991.
English
Publication Date:
March 1, 1991
ISBN/ISSN:
9781451844702/1018-5941
Stock No:
WPIEA0291991
Pages:
49
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