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Beyond Competitive Devaluations : The Monetary Dimensions of Comparative Advantage
Bergin, Paul R. - 2019
inflation and the output gap, monetary policy can foster the competitiveness of these firms, encouraging investment and entry in …
Persistent link: https://www.econbiz.de/10012871944
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The Twin Ds : Optimal Default and Devaluation
Na, Seunghoon - 2014
A salient characteristic of sovereign defaults is that they are typically accompanied by large devaluations. This paper presents new evidence of this empirical regularity known as the Twin Ds and proposes a model that rationalizes it as an optimal policy outcome. The model combines limited...
Persistent link: https://www.econbiz.de/10013050289
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Balance-of-Payments Crises and Devaluation
Obstfeld, Maurice - 2021
The collapse of a fixed exchange rate is typically marked by a sudden balance-of-payments crisis in which"speculators" fleeing from the domestic currency acquire a large portion of the central bank's foreign exchange holdings.Faced with such an attack, the central bank often withdraws...
Persistent link: https://www.econbiz.de/10013220420
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Discrete Devaluation as a Signal to Price Setters
Katseli, Louka T. - 2021
The central hypothesis of this paper is that both the extent and speed of adjustment of the real exchange rate is affected by the way the central bank manages the nominal exchange rate. Specifically, a large discrete adjustment of the nominal exchange rate is more likely to result in fast...
Persistent link: https://www.econbiz.de/10013213455
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Devaluation Risk and the Syndrome of Exchange-Rate-Based Stabilizations
Mendoza, Enrique G.; Uribe, Martín - 2021
This paper shows that the risk of devaluation can be an important factor accounting for the stylized facts of exchange-rate-based stabilizations. This conclusion follows from studying the quantitative implications of a two-sector equilibrium business cycle model of a small open economy...
Persistent link: https://www.econbiz.de/10013244367
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Why are Rates of Inflation so Low after Large Devaluations?
Burstein, Ariel T.; Eichenbaum, Martin; Rebelo, Sergio T. - 2021
This paper studies the behavior of inflation after nine large post-1990 contractionary devaluations. A salient feature … of the data is that inflation is low relative to the rate of devaluation. We argue that distribution costs and …
Persistent link: https://www.econbiz.de/10013226060
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On the Fiscal Implications of Twin Crises
Burnside, A. Craig; Eichenbaum, Martin; Rebelo, Sergio T. - 2021
inflation and depreciation rates. We use a first-generation type model of speculative attacks which has four key features: (i … the crises; (iii) a portion of the government's liabilities are not indexed to inflation; and (iv) there are nontradable … account for the high rates of devaluation and moderate rates of inflation often observed in the wake of currency crises. We …
Persistent link: https://www.econbiz.de/10013247252
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The Plaza Accord, 30 Years Later
Frankel, Jeffrey A. - 2015
The paper reviews an event of 30 years ago from the perspective of today: a successful G-5 initiative to reverse what had been an overvalued dollar. The “Plaza Accord” is best viewed not as the precise product of the meeting on September 22, 1985, but as shorthand for a historic change in US...
Persistent link: https://www.econbiz.de/10013009917
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Money, the Rate of Devaluation and Interest Rates in a Semi-Open Economy : Colombia 1968-1982
Edwards, Sebastian - 2021
In this paper an empirical model for analyzing the behavior of nominal interest rates in a semi-open economy is developed. The model explicitly incorporates both the role of open economy factors (i.e., world interest rates, expected rate of devaluation) and domestic monetary conditions in...
Persistent link: https://www.econbiz.de/10013233891
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Are Devaluations Contractionary?
Edwards, Sebastian - 2021
Recently a number of authors have criticized the role of devaluations in traditional stabilization programs. It has been argued that, contrary to the traditional view, devaluations are contractionary, and generate a decline in aggregate output. In spite of the renewed theoretical interest in the...
Persistent link: https://www.econbiz.de/10013249266