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Thursday, July 16, 2020 | History

2 edition of Real exchange rate targeting under imperfect asset substitutability found in the catalog.

Real exchange rate targeting under imperfect asset substitutability

JosГ© SaГєl Lizondo

Real exchange rate targeting under imperfect asset substitutability

by JosГ© SaГєl Lizondo

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  • 5 Currently reading

Published by International Monetary Fund in Washington, D.C .
Written in English


Edition Notes

Includes bibliographical references.

Statementprepared by J. Saul Lizondo.
SeriesIMF working paper -- WP/93/38
ContributionsInternational Monetary Fund. Western Hemisphere Dept.
The Physical Object
Paginationiii, 20 p. ;
Number of Pages20
ID Numbers
Open LibraryOL18071504M

the real exchange rate k periods ahead may be assumed to be a constant, corresponding to a flexible price equilibrium of purchasing power parity. Although equation (3) as it stands predicts the real exchange rate, it can be modified to explain the nominal exchange rate. This is done by breaking the real exchange rate into its real and nominal.   Once a role for imperfect substitutability is accepted, the effectiveness of portfolio rebalancing will depend on the degree of substitutability between assets. That might cause the exchange rate—another asset class—to depreciate. Yellen () notes a possible caveat to this real exchange rate channel. While depreciation boosts the Cited by:

This paper explores the role of exchange rates in emerging economies with inflation-targeting regimes, an issue that has become especially germane during the current episode of financial turmoil and volatile capital flows. Under inflation targeting, the interest rate is the main monetary policy tool for influencing activity and inflation, and there is little agreement about the appropriate.   Table 4 reports the results. Under CPI targeting, the monetary authorities hold overall price levels constant, so that the only source of real exchange rate change is nominal exchange rate change. As a result, nominal and real exchange rate changes are equal, as can be seen by comparing table 4 with table 3.

  While many countries throughout the world have faced severe financial crises over the last decades, and while the Japanese stagnation and the Asian financial crisis did induce some additional interest for the introduction of banking and finance in macroeconomic theory, it is only with the advent of the US subprime financial crisis that macroeconomic and monetary theories put forward by. Dealing with Multiple Currencies in Transitional Economies begun more than 20 years ago under the New Economic Mechanism. They transformed the centrally planned economy into a market-oriented one, contributing to economic growth through liberalization, modernization, and integration with the surrounding East Asia and the rest of the world.


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Real exchange rate targeting under imperfect asset substitutability by JosГ© SaГєl Lizondo Download PDF EPUB FB2

Get this from a library. Real Exchange Rate Targeting Under Imperfect Asset Substitutability. [José Lizondo; Saúl.] -- This paper presents a model of an economy that uses nominal exchange rate policy to keep the real exchange rate constant at a certain target level, under imperfect asset substitutability.

Downloadable. This paper presents a model of an economy that uses nominal exchange rate policy to keep the real exchange rate constant at a certain target level, under imperfect asset substitutability.

The paper discusses the determinants of inflation under such a policy, and examines the consequences of exogenous and policy-induced shocks on inflation, the external accounts, and the fiscal.

Optimal Real Exchange Rate Targeting. Under a real exchange rate targeting rule, by contrast, both the nominal ex- imperfect asset substitutability. Targeting the Real Exchange Rate: Theory and Evidence Article (PDF Available) in Journal of Development Economics 47(1) June with Reads How we measure 'reads'.

José Saúl Lizondo, "Real Exchange Rate Targeting Under Imperfect Asset Substitutability," IMF Working Papers 93/38, International Monetary dge, Stephen & Nelson, Charles R., "A new approach to decomposition of economic time series into permanent and transitory components with particular attention to measurement of the `business cycle'," Journal of Monetary Economics.

Michael Melvin, Stefan Norrbin, in International Money and Finance (Ninth Edition), Monetary Policy Under Floating Exchange Rates. We now consider a world of flexible exchange rates and perfect capital mobility. The notable difference between the analysis in this section and the fixed exchange rate stories of the previous two sections is that with floating rates the central bank is not.

Exchange-Rate Determination with Imperfect Capital Substitutability UIP and Exchange-Rate Determination The Mundell-Fleming Model of the Exchange Rate Theory Monetary Policy Fiscal Policy The Monetary Model of the Exchange Rate Theory Monetary Policy Author: Michael Wickens.

Vol Issue 4, December ISSN: The Yield Curve and Real Activity. Zuliu Hu Pages OriginalPaper. A Primer on Tax Evasion. Vito Tanzi, Parthasarathi Shome Pages OriginalPaper.

Real Exchange Rate Targeting under Imperfect Asset Substitutability. Saul Lizondo Pages OriginalPaper. Foreign Exchange. We analyze coordination of monetary and exchange rate policy in a two-sector model of a small open economy featuring imperfect substitution between domestic and foreign financial assets.

Our central finding is that tight management of the exchange rate greatly enhances the efficacy of inflation targeting. Targeting the real exchange rate in Cited by: 6. Every important topic is covered, including growth, business cycles, fiscal policy, taxation and debt finance, current account sustainability, and exchange-rate determination.

There is also an up-to-date account of monetary policy through inflation targeting. where RIR is the long-term rand interest rate and the variables inside the function “f”represent, respectively, USI, the long-term U.S. interest rate; SPREAD, the sovereign spread 2; CP, the currency premium; EC, the effect of exchange controls; and IS,other effects of imperfect asset substitutability.

Although the precise functional form is generally quite complicated, in. Interrnacional economics 1. International Economics Theory & Policy 2. The Pearson Series in Economics Abel/Bernanke/Croushore Macroeconomics* Bade/Parkin Foundations of Economics* Berck/Helfand The Economics of the Environment Bierman/Fernandez Game Theory with Economic Applications Blanchard Macroeconomics* Blau/Ferber/Winkler The Economics of Women.

In this study, Panel Vector Autoregression (PVAR) models are used to determine the impacts of exchange rate volatility on industrial production growth rate, consumer price inflation, short-term interest rates and stock returns for 10 OECD countries.

The variance decompositions (VDCs) found that exchange rate volatility can be a secondary factor for the variations in immediate interest rates Author: Oguzhan Ozcelebi.

Please read our short guide how to send a book to Kindle. Save for later exchange rates monetary economic assets economy banks inflation prices crisis equilibrium income asset deposits currencies markets investment goods interest rates payments ECPN Table of Contents ECPN Table of Contents 2 Answer to Question 3 Costs and Benefits of FDI 3 Determinants of FDI 4 Answer to Question 2 5 Answer to Question 3 6 Answer to Question 4 7 Answer to Question 5 8 References 10 Answer to Question 1 Foreign Direct Investment is regarded as one of the most essential of all factors that assist in economic development of a nation.

The Terms of Trade and the Real Exchange Rate The Law of One Price Purchasing Power Parity Some Stylized Facts about the Terms of Trade and the Real Exchange Rate Imperfect Substitutability of Tradeables Pricing-to-Market, Local-Currency Pricing, and Producer-Currency Pricing The book is divided into trade and finance.

Within each half, core theory chapters are followed by a series of application chapters that confront policy questions using the newest empirical work, data, and policy debates. Coverage of international trade features: ; An integrated treatment and empirical evidence of the latest models of trade, such as the gravity, Ricardian, factor endowments.

The paper concerns the concept of foreign direct investment which is the movement of capital resources from one location to another often with the involvement of.

This book provides a comprehensive review of recent economic developments in South Africa and the structural and policy challenges facing the authorities. Individual papers examine a range of topics such as unemployment and the labor market, recent trends in the private saving rate, the role of foreign direct investment in the development of South Africa's economy, the human and economic.

The Terms of Trade and the Real Exchange Rate. The Law of One Price; Purchasing Power Parity; Some Stylized Facts about the Terms of Trade and the Real Exchange Rate; Imperfect Substitutability of Tradeables. Pricing-to-Market, Local-Currency Pricing, and Producer-Currency Pricing.

fixed exchange rates, and the magnitude of offset coefficient between domestic and foreign asset components of high powered money is less than one. In contrast, if there is no credit rationing, imperfect asset substitutability between bonds and loans per se cannot generate the real effect of money in the same model.

JEL classification: E51 FThe Terms of Trade and the Real Exchange Rate The Law of One Price Purchasing Power Parity Some Stylized Facts about the Terms of Trade and the Real Exchange Rate Imperfect Substitutability of Tradeables Pricing-to-Market, Local Currency Pricing, and Producer Currency Pricing The model features incomplete markets, imperfect asset substitutability, and nominal rigidities.

In this environment, policymakers can respond to fluctuations in capital flows through capital account policies such as sterilized interventions and taxing capital inflows, in addition to conventional monetary policy.