Do currency boards increase the credibility of exchange-rate pegs?
نویسندگان
چکیده
منابع مشابه
Managing Currency Pegs
When confronted with the current crisis in peripheral Europe, many specialists in emerging-market macroeconomics feel that it is déjà vu all over again. An implication of this feeling is that in order to understand the current situation in southern Europe, one should dust off the theories of exchange-rate crises that were motivated by the economic experience under fixed exchange rates in Latin ...
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Uncertainty shocks cause economic activity to contract and more so, if monetary policy is constrained by an effective lower bound on interest rates. In this paper, we investigate whether countries with a currency peg or countries within currency unions are also particularly prone to suffer from the adverse effects of heightened uncertainty because they lack monetary independence. First, we esti...
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The paper compares the credibility of currency boards and (standard) pegs. Abandoning a currency board requires a time-consuming legislative process and an abolition will thus be previously expected. Therefore, a currency board solves the time inconsistency problem of monetary policy. However, policy can react to unexpected shocks only with a time lag, thus the threat of large shocks makes the ...
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This paper analyses predictions of a simple model of currency crises in which the peg will be abandoned when the currency overvaluation hits a certain threshold, unknown to the agents. Due to learning about the threshold, some features usually observed in the data and identified with models with multiple equilibria arise in the model. But the model yields distinctive predictions about the behav...
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ژورنال
عنوان ژورنال: Intereconomics
سال: 2003
ISSN: 0020-5346,1613-964X
DOI: 10.1007/bf02914023