Exchange rate-based stabilization with endogenous fiscal response
نویسندگان
چکیده
منابع مشابه
Exchange Rate Policy and Endogenous Price Flexibility
A fixed exchange rate limits the ability of the real exchange rate to adjust to shocks, and tends to raise the volatility of real GDP. But adjustment may be enhanced if internal prices are more flexible under a fixed exchange rate. This paper develops a model in which price setters incur a cost to retain the option of ex-post price flexibility. The benefit of flexibility is increasing in the va...
متن کاملEndogenous Trade Participation with Incomplete Exchange Rate Pass-Through
This paper investigates the implications of endogenous trade participation for international business cycles, trade flow dynamics and exchange rate pass-through when price adjustments are staggered across firms. I develop a two-country dynamic stochastic general equilibrium model wherein firms make state-dependent decisions on entry and exit in the export market and the frequency of price adjus...
متن کاملEquilibrium Sovereign Default with Endogenous Exchange Rate Depreciation
Sovereign default often affects country’s trade relations. The defaulter’s currency depreciates while trade volume falls drastically. To explain this connection, this study proposes a model to incorporate real depreciation along with sovereign bankruptcy. Defaulters must exchange more of their own goods for imports, which stimulates an adjustment to the equilibrium exchange rate. We demonstrate...
متن کاملInfrequent Fiscal Stabilization
We study discretionary non-cooperative monetary and fiscal policy stabilization in the New Keynesian model, where the fiscal authority uses distortionary taxes as policy instrument. We explicitly model different frequencies of fiscal and monetary policy operations. We find that standard models of monetary and fiscal policy interactions may substantially overestimate the social gain from the sta...
متن کاملExpenditure switching versus real exchange rate stabilization: Competing objectives for exchange rate policy
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...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
ژورنال
عنوان ژورنال: Journal of Development Economics
سال: 1997
ISSN: 0304-3878
DOI: 10.1016/s0304-3878(97)00029-1