Targeting the Real Exchange Rate : Theory and Evidence /

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 te...

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Detalles Bibliográficos
Autor principal: Vegh Gramont, Carlos
Otros Autores: Calvo, Guillermo, Reinhart, Carmen
Formato: Revista
Lenguaje:English
Publicado: Washington, D.C. : International Monetary Fund, 1994.
Colección:IMF Working Papers; Working Paper ; No. 1994/022
Acceso en línea:Full text available on IMF
Descripción
Sumario: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.
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Descripción Física:1 online resource (50 pages)
Formato:Mode of access: Internet
ISSN:1018-5941
Acceso:Electronic access restricted to authorized BRAC University faculty, staff and students