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Monday, July 27, 2020 | History

2 edition of Real exchange rate targeting and macroeconomic instability found in the catalog.

Real exchange rate targeting and macroeconomic instability

Martin Uribe

Real exchange rate targeting and macroeconomic instability

by Martin Uribe

  • 82 Want to read
  • 40 Currently reading

Published by National Bureau of Economic Research in Cambridge, MA .
Written in English

    Subjects:
  • Foreign exchange rates -- Mathematical models.,
  • Macroeconomics.

  • Edition Notes

    StatementMartin Uribe.
    SeriesNBER working paper series -- no. 9294, Working paper series (National Bureau of Economic Research) -- working paper no. 9294.
    ContributionsNational Bureau of Economic Research.
    The Physical Object
    Pagination31 p. ;
    Number of Pages31
    ID Numbers
    Open LibraryOL22444350M

    In recent years several authors have argued that developing countries should aim to target a stable and competitive real exchange rate (SCRER) to foster economic growth. A growing body of empirical research gives support to this claim. Although more theoretical work is needed, some ideas from development theory can help to explain the empirical findings. To some extent, exchange rate flexibility helped absorb external shocks, minimizing the real effects by increasing short-run RER volatility. However, in some cases excessive nominal exchange rate volatility could be incoherent with fundamentals and thus could be a source of macroeconomic instability.

    A new ‘Trade Formula’ of Real Exchange Rates † Derive a theoretical relationship between real exchange rates, international trade and macroeconomic fundamentals. † Under a simple parametric form, there is an equilibrium relationship between real exchange rates and ƒ ratio of domestically-endowed good consumptions ƒ relative bilateral trade flows ƒ relative composite . and real exchange rates in the short- to medium-run. This is widely-known as the ‘exchange rate disconnect puzzle’. This paper derives a new relationship between real exchange rates, international trade and macroeconomic fundamentals for a wide class of a general equilibrium.

      Exchange rate and macroeconomic stability: Determinants and Pass-through effects Ghana has moved away from monetary targeting to inflation targeting regime. Since both inflation and money supply (nominal shocks) have implications for both the nominal and real exchange rate, the dynamics of the real exchange rate might differ under these. The Real Exchange Rate as a Target of Macroeconomic Policy 83 concern is whether the results are driven by cases of RER overvaluation decelerating economic growth. Put differently, the positive relationship between RER levels and growth rates may result from low RER levels decelerating growth, which also implies a.


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Real exchange rate targeting and macroeconomic instability by Martin Uribe Download PDF EPUB FB2

Real exchange rate targeting and macroeconomic instability. Cambridge, MA.: National Bureau of Economic Research, © (OCoLC) Material Type: Internet resource: Document Type: Book, Internet Resource: All Authors / Contributors: Martin Uribe; National Bureau of Economic Research.

Request PDF | Real Exchange Rate Targeting and Macroeconomic Instability | The paper focuses on satisfaction with income and proposes a utility model built on Author: Martín Uribe. Real Exchange Rate Targeting and Macroeconomic Instability Article in Journal of International Economics 59(1) January with 11 Reads How we measure 'reads'.

Get this from a library. Real exchange rate targeting and macroeconomic instability. [Martin Uribe; National Bureau of Economic Research.] -- Abstract: Using an optimizing model of a small open economy, this paper studies the macroeconomic effects of PPP rules whereby the government increases the devaluation rate when the real exchange.

Martin Uribe, "Real Exchange Rate Targeting and Macroeconomic Instability," NBER Working PapersNational Bureau of Economic Research, Inc.

Martin Uribe, "Real exchange rate targeting and macroeconomic instability," International Finance Discussion PapersBoard of Governors of the Federal Reserve System (U.S.), revised Cited by: Real Exchange Rate Targeting and Macroeconomic Instability Martin Uribe.

NBER Working Paper No. Issued in October NBER Program(s):Economic Fluctuations and Growth, International Finance and Macroeconomics Using an optimizing model of a small open economy, this paper studies the macroeconomic effects of PPP rules whereby the government increases.

"Real exchange rate targeting and macroeconomic instability," Journal of International Economics, Elsevier, vol. 59(1), pagesJanuary. Martin Uribe, " Real Exchange Rate Targeting and Macroeconomic Instability," NBER Working PapersNational Bureau of.

Using an optimizing model of a small open economy, this paper studies the macroeconomic effects of PPP rules whereby the government increases the devaluation rate when the real exchange rate—defined as the price of tradables in terms of nontradables—is below its long-run level and reduces the devaluation rate when the real exchange rate is above its long-run by: The use of exchange-rate targeting as a stabilization instrument has important e ffects on the inflation rate, as well as on aggregate output and the distribution of income.

Most of the stud-ies in this literature focus their analysis on the impact of targeting on the in flation rate in the context of macroeconomic stabilization plans. assets. Our central finding is that management of the exchange rate greatly enhances the efficacy of inflation targeting.

In a flexible exchange rate system, inflation targeting incurs a high risk of indeterminacy where macroeconomic fluctuations can be driven by self-fulfilling Size: 2MB. R eal exchange rate targeting and macroeconomic instability Martın Uribe which exchange rate instability, both nominal and real, occurs simply because the public expect it.

This instability is shown to be welfare decreasing. that real exchange rate targeting can have unintended consequences. However, that. In this study, panel vector autoregression (PVAR) models are employed to examine the relationships between industrial production growth rate, consumer price inflation, short-term interest rates, stock returns and exchange rate volatility.

More specifically, I explored the consequences of the dynamics detected by the models on monetary policy implementation for Author: Oguzhan Ozcelebi. rate target-and the target zone proposed by Williamson ()- a real exchange rate target, and allow for a continuum of exchange. rate targets, spanning between both alternatives.

1bis setup allows for flexibility in the design of the contract, adding new insights to. Exchange Rate Rules and Macroeconomic Stability Rudiger Dornbusch. NBER Working Paper No. Issued in April NBER Program(s):International Trade and Investment Program, International Finance and Macroeconomics Program This paper discusses exchange rate rules in their role as macroeconomic instruments.

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 Author: Oguzhan Ozcelebi. The types of operational policy regimes that have been extensively analyzed include money growth targeting, nominal interest rate targeting, inflation targeting and nominal income targeting, among others.

1 However, the stability effects of real interest rate targeting are largely ignored in the existing studies of monetary by: 2. The Asian crisis of was a major influence on macroeconomic thinking concerning exchange rate regimes, the functioning of international institutions, such as the IMF and the World Bank, and international contagion of macroeconomic instability from one country to : Hardcover.

The Macroeconomic Theory of Exchange Rate Crises è un lavoro notevole,di grande spessore culturale e scientifico ad opera di un vero scienziato della materia. Nel mondo in cui viviamo dove è sufficiente andare in TV a dire le "solite cose note" per essere chiamati economisti e godere del rispetto incondizionato di tutti,una ricerca di questa Cited by: 9.

Macroeconomic Instability 62 The Debt Burden Effect 62 Empirical Evidence 63 Monetary flation Targeting Exchange Rate flation Targeting The Brazilian Real Crisis Banking and Currency Crises File Size: KB. DANI RODRIK Figure 1. Undervaluation and Economic Growth in Selected Developing Countries, – China 0 4 2 6 8 – – – 0 Log units Percent a yearFile Size: KB.

The macroeconomic effects of a variety of exogenous and policy-induced real disturbances are examined under the assumption that the authorities target the level of the real exchange rate. We first Cited by: This paper has explored some of the macroeconomic implications of real exchange rate targeting in developing countries and has shown that countries that experience real shocks while following such a policy are likely to face problems in controlling the price level, problems that are unlikely to be solved—except in the short run—by following.In an intriguing synthesis of current theories of international finance, trade, and industrial organization, Paul Krugman presents a provocative analysis of the extraordinary volatility of exchange rates in the s.

Krugman focuses on imperfect integration of the world economy, showing how this has become both a cause and effect of exchange rate instability.