scholarly journals Transmission of Nominal Exchange Rate Changes to Export Prices and Trade Flows and Implications for Exchange Rate Policy

2010 ◽  
Vol 112 (1) ◽  
pp. 127-161 ◽  
Author(s):  
Mathias Hoffmann ◽  
Oliver Holtemöller
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Policy ◽  
Trade Flows ◽  
Nominal Exchange Rate ◽  
Export Prices ◽  
Rate Policy ◽  
Exchange Rate Changes

THE CASE FOR AN INTERMEDIATE EXCHANGE RATE REGIME

2007 ◽  
Vol 52 (03) ◽  
pp. 295-307 ◽  
Author(s):  
JOHN WILLIAMSON
Keyword(s):  
Exchange Rate ◽  
Inflation Targeting ◽  
Exchange Rate Regime ◽  
Exchange Rate Policy ◽  
Rate System ◽  
Advantages And Disadvantages ◽  
Economics Profession ◽  
Rate Policy ◽  
Exchange Rate Changes ◽  
Floating Rates

The argument that any exchange rate regimes other than firmly fixed and freely floating rates were infeasible — the so-called bipolarity thesis — acquired great popularity in the wake of the Asian crisis of a decade ago, but it has almost vanished today. One reason is surely the unkind empirical evidence, which shows that intermediate regimes — measured as those where both reserve and exchange rate changes lie in an intermediate range — are not in fact tending to disappear (Levy Yeyati and Sturzenegger, 2002). Another reason is the recognition that exchange rate policy should have other objectives besides avoiding crises, and that in the world we live in today it is reasonable to give these other objectives a significant priority. And perhaps a third factor is growing recognition that it is possible to design or operate intermediate regimes in ways that avoid exposing them to the dangers that were focused on by the disciples of bipolarity. This article starts by distinguishing the options that countries face in choosing an exchange rate regime. It examines the advantages and disadvantages of each of them, finally suggesting that for most countries the real choice lies between freely floating rates, floating rates disciplined by a reference rate system, and an ill-defined managed floating with the management undefined. Three issues may influence the choice between those alternatives: transparency; perceived consistency with that pillar of current macroeconomic thinking, inflation targeting; and the theory of what determines exchange rates. In the latter context, it is argued that the current conventional wisdom of the economics profession is wrong, and that a more convincing diagnosis of the process of exchange rate determination lends support to the proposal for a reference rate system.

The persistence of moderate inflation in the czech republic and the czk crisis of may 1997

1999 ◽  
Vol 8 (4) ◽  
Author(s):  
Josef C. Brada ◽  
Ali M. Kutan
Keyword(s):  
Exchange Rate ◽  
Czech Republic ◽  
Exchange Rate Policy ◽  
Nominal Exchange Rate ◽  
Fiscal Policies ◽  
Foreign Reserves ◽  
Macroeconomic Policies ◽  
The Czech Republic ◽  
Speculative Attack ◽  
Rate Policy

The paper deals with the exchange rate policy being implemented in combination with the mix of monetary and fiscal measures prior to the speculative attack on the CZK in 1997. The fixed nominal exchange rate may have been retained for too long and the monetary and fiscal policies were inappropriate. It explains the relation between Czech inflation, exchange rate and macroeconomic policies until the crisis of May 1997. <P>While the Czech Republic weathered its currency crisis much better than did most other emerging economies, with the worst damage being a USD 2 billion loss of foreign reserves, the crisis failed to resolve all of the fundamental problems. It gives also some explanations for the persistence of inflation at a level around 10 % until mid-1998.

Emerging Markets Central Banks Exchange Rate Policy

2011 ◽  
pp. 21-34 ◽  
Author(s):  
S. Andryushin ◽  
V. Kuznetsova
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Exchange Rate Regime ◽  
Central Banks ◽  
Exchange Rate Policy ◽  
Point Of View ◽  
Nominal Exchange Rate ◽  
Safeguard Measures ◽  
Rate Policy ◽  
The Exchange Rate

The article analyzes the emerging markets central banks exchange rate policy, while they choose the exchange rate regime in conditions of financial globalization. The authors present the new IMF exchange rate regimes taxonomy which separates them using historical data about nominal exchange rate developments. They identify some factors which affect the exchange rate regime option from the macroeconomic point of view. The article reviews some national markets safeguard measures from external shocks generated by international capital inflow or outflow.

scholarly journals Impact of Devaluation on Pakistan's External Trade: An Econometric Approach

1994 ◽  
Vol 33 (4II) ◽  
pp. 1205-1215 ◽  
Author(s):  
M. Aynul Hasan ◽  
Ashfaque H. Khan
Keyword(s):  
Exchange Rate ◽  
Trade Balance ◽  
Exchange Rate Policy ◽  
External Trade ◽  
Expenditure Switching ◽  
Rate Policy ◽  
Exchange Rate Changes ◽  
Centre Piece ◽  
Econometric Approach ◽  
Industrialised Countries

Exchange rate policy to improve external competitiveness has now become the centre piece of any adjustment effort. It is expected that a nominal devaluation will result in expenditure switching, increased production of tradeable, higher exports, and in an improvement of the external accounts of the country in question. Recently, the traditional stabilisation packages, and especially their devaluation component, have come under attack by a number of authors.! It has been argued that devaluation can be counterproductive because exports and imports are relatively insensitive to price and exchange rate changes, especially in developing and semi-industrialised countries.2.3 If the price elasticities of imports and exports are sufficiently low, the trade balance expressed in domestic currency may worsen. Grubel (1976) has argued that a country's persistent payments imbalances can be due only to faulty monetary policy and cannot be corrected by either devaluation (exchange rate policy) or the use of fIscal policy. In a recent article, Miles (1979) claims to have provided the requisite evidence to support Grubel's argument. Miles (1979) shows that devaluation does not improve the trade balance but improves the balance of payments. This results implies that the improvement comes through the capital account.

scholarly journals Pakistan's Exchange Rate Policy: An Econometric Investigation

1992 ◽  
Vol 31 (1) ◽  
pp. 49-74 ◽  
Author(s):  
Mohammad Ahmed
Keyword(s):  
Exchange Rate ◽  
Error Correction ◽  
Exchange Rate Policy ◽  
Nominal Exchange Rate ◽  
Policy Intervention ◽  
Policy Rule ◽  
Correction Model ◽  
Inflation Differential ◽  
Monetary Authorities ◽  
Rate Policy

This paper examines empirical determinants of the Pakistani rupee exchange rate since the advent of the managed float in 1982. The behaviour of the nominal exchange rate results from policy intervention carried out by the monetary authorities. Various testable hypotheses are developed in order to discern the factor(s) which can be the determinants of the nominal rupee exchange rate. In the shon run, authorities follow a contingent policy rule with respect to movements of the U. S. dollar against the SDR. Based on vector autoregression techniques, the error correction model is employed to check the consistency of the shon-run adjusunent process, given the authorities' longrun target rupee value. The 'revealed' policy is to panly offset the inflation differential between Pakistan and its major trading parUlers. Under plausible conditions, the burden of adjusunent and recessionary conditions are likely to occur in the Pakistani expon sector.

scholarly journals Mehanizam uticaja promene deviznog kursa na inflaciju

2003 ◽  
Vol 44 (158) ◽  
pp. 149-167 ◽  
Author(s):  
Dejan Miljkovic
Keyword(s):  
Exchange Rate ◽  
Nominal Exchange Rate ◽  
Rate System ◽  
Export Prices ◽  
Fixed Exchange Rate ◽  
Starting Point ◽  
Exchange Rate System ◽  
The Exchange Rate ◽  
Pass Through ◽  
Exchange Rate Changes

The implementation of an adequate exchange rate policy inevitably leads us to the pass-through of exchange rate changes on export prices and inflation. During the last decade of 20th century, there was a lot of research done on the pass-through of exchange rate changes from the microeconomic aspect. This approach, known as New Open Economy Macroeconomics, is theoretically grounded mainly on producers' ability to price discriminate in markets for export goods. Consistent with the established theoretical framework, the focus of this research has been directed towards studying the pass-through of exchange rate changes to export prices. Relatively few research papers, also based on theoretical grounds of basically macroeconomic character, have dealt with the pass-through of exchange rate changes to inflation. This paper observes the pass-through of exchange rate changes to inflation from the macroeconomic aspect. The starting point of our theoretical consideration of the pass-through of exchange rate changes to inflation is the well-known Dornbusch's overshooting model. The observation of the pass-through of exchange rate changes to inflation within the overshooting model allows us to observe two dimensions through which changes in the exchange rate pass through to inflation. The first dimension observes the pass-through of nominal exchange rate changes to inflation, whereas the second one observes the deviations of the nominal exchange rate from the equilibrium nominal exchange rate, having simultaneous internal and external equilibrium. The final pass-through of exchange rate changes to inflation will depend on the joint influence of both dimensions. Also, the pass-through of exchange rate changes to inflation will be observed in the countries with a fixed exchange rate system, which so far has not been a common situation in practice. We believe that exchange rate changes pass through to inflation even in a fixed exchange rate system, when a change in the exchange rate is equal to zero, which is manifested in deviations of the nominal exchange rate from the equilibrium exchange rate.

Sign in / Sign up

Export Citation Format

Share Document