Monetary Policy and Exchange Rate Regime: Proposal for a Small and Less Developed Economy

The Political Economy of Exchange Rate Regime Determination: A Comparison of Developing and Developed Countries

The non-optimal choice of exchange rate policy is a serious obstacle to improving the country's economic situation. Considering that the involvement of political economy factors in the adoption of exchange rate policy causes its inefficiency and the choice of exchange rate regime in developing countries seems to has been more influenced by the political economy factors, the study of amount and ...

Monetary Policy, Exchange Rate Flexibility, and Exchange Rate Pass-Through

This paper develops a dynamic general-equilibrium (DGE) model of a small open economy to investigate alternative monetary rules, differing primarily in the degree to which they allow for exchange rate flexibility. A central argument of the paper is that the nature of the trade-off between fixed and floating exchange rates may be quite different in mature industrial economies than in emerging-ma...

Monetary policy and exchange rate overshooting in Iran: A Vector Errors Correction (VEC) approach

Assumption of exchange rate overshooting has significant position in international macroeconomic discussion. This phenomenon is one of the abnormal behaviors of exchange rate that happen in short run. Dornbusch (1976) shows that because speed of equilibrium prices is slow relative to asset markets and commodity prices are sticky in the short run, However, over time, commodity prices will rise a...

The Appropriate Exchange Rate System and the Regulation and Forecast of Exchange Rate for Iran's Economy

Liquidity Shocks and Optimal Monetary and Exchange Rate Policies in a Small Open Economy

This paper studies the potential for liquidity crises and their impact on the course of monetary and exchange rate policies in a microfounded general equilibrium dynamic model in the tradition of Diamond and Dybvig (1983) and Chang and Velasco (2000). We produce a small open economy pure exchange overlapping generations model with random relocation along the lines of Smith (2002). The combinati...