Business Cycle Implication of Exchange Rate-Based Stabilization
نویسندگان
چکیده
منابع مشابه
Optimal Exchange Rate Policy and Business Cycles*
Implementation and collapse of exchange rate pegging schemes are recurrent events. A currency crisis is often followed by an economic downturn while pegging often begets a boom. In this paper I study why a benevolent central bank should pursue a monetary policy that leads to those recurrent currency crises and subsequent periods of pegging. I show that the optimal policy induces a competitive e...
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Average postwar expansions are twice as long as prewar expansions, and contractions are one-half as long. This paper investigates three possible explanations. The first explanation is that shocks to the economy have been smaller in the postwar period. The second explanation is that the composition of output has shifted from very cyclical sectors to less cyclical sectors. The third explanation i...
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This paper studies a quantitative dynamic-optimizing business cycle model of a small open economy with staggered price and wage setting. The model exhibits exchange rate overshooting in response to money supply shocks. The predicted variability of the nominal and, especially, of the real exchange rate is noticeably higher than in standard Real Business Cycle models with flexible prices and wage...
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This paper develops a view of exchange rate policy as a trade-off between the desire to smooth fluctuations in real exchange rates so as to reduce distortions in consumption allocations, and the need to allow flexibility in the nominal exchange rate so as to facilitate terms of trade adjustment. We show that optimal nominal exchange rate volatility will reflect these competing objectives. The k...
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ژورنال
عنوان ژورنال: International Journal of Economics and Finance
سال: 2010
ISSN: 1916-9728,1916-971X
DOI: 10.5539/ijef.v2n2p12