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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Détails bibliographiques
Auteur principal: Vegh Gramont, Carlos
Autres auteurs: Calvo, Guillermo, Reinhart, Carmen
Format: Revue
Langue:English
Publié: Washington, D.C. : International Monetary Fund, 1994.
Collection:IMF Working Papers; Working Paper ; No. 1994/022
Accès en ligne:Full text available on IMF
Description
Résumé: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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Description matérielle:1 online resource (50 pages)
Format:Mode of access: Internet
ISSN:1018-5941
Accès:Electronic access restricted to authorized BRAC University faculty, staff and students