Price And Volume Effects Of A Devaluation In Developing Countries
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Price and Volume Effects of a Devaluation in Developing Countries by Mr.Arend Kouwenaar Pdf
The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
Price and Volume Effects of a Devaluation in Developing Countries by Arend Kouwenaar Pdf
This paper develops a simple tool to assess the medium-term effects of a devaluation on domestic price and output levels in developing countries. It focuses on the formation of the wage rate and on government expenditure and tax policies under a devaluation, as the main determinants of the quot;pass-throughquot; process, which is described by a simple general-equilibrium dependent-economy model. The main characteristic of the model is that a nominal devaluation will only bring the economy closer toward external and internal equilibria if it is accompanied by reductions in the real government deficit and the real wage. The insertion of key parameters, available for most countries, into the reduced form of the model permits a quick and easy quantification of both price and volume effects and allows a sensitivity analysis with respect to parameter and policy assumptions. The approach is applied numerically to five African countries.
Author : Richard N. Cooper Publisher : Princeton, N.J. : International Finance Section, Princeton University Page : 48 pages File Size : 50,7 Mb Release : 1971 Category : Business & Economics ISBN : UOM:49015001125898
Author : Michael D. Bordo,Barry Eichengreen Publisher : University of Chicago Press Page : 692 pages File Size : 48,7 Mb Release : 2007-12-01 Category : Business & Economics ISBN : 9780226066905
A Retrospective on the Bretton Woods System by Michael D. Bordo,Barry Eichengreen Pdf
At the close of the Second World War, when industrialized nations faced serious trade and financial imbalances, delegates from forty-four countries met in Bretton Woods, New Hampshire, in order to reconstruct the international monetary system. In this volume, three generations of scholars and policy makers, some of whom participated in the 1944 conference, consider how the Bretton Woods System contributed to unprecedented economic stability and rapid growth for 25 years and discuss the problems that plagued the system and led to its eventual collapse in 1971. The contributors explore adjustment, liquidity, and transmission under the System; the way it affected developing countries; and the role of the International Monetary Fund in maintaining a stable rate. The authors examine the reasons for the System's success and eventual collapse, compare it to subsequent monetary regimes, such as the European Monetary System, and address the possibility of a new fixed exchange rate for today's world.
Author : International Monetary Fund Publisher : International Monetary Fund Page : 52 pages File Size : 40,7 Mb Release : 1990-12-01 Category : Business & Economics ISBN : 9781451943221
Parallel Currency Markets in Developing Countries by International Monetary Fund Pdf
The paper reviews recent theoretical and empirical developments in the analysis of informal currency markets in developing countries. The basic characteristics of these markets are highlighted, and alternative analytical models to explain them are discussed. The implications for exchange rate policy —including imposition of foreign exchange restrictions, devaluation, and unification of exchange markets— in countries with a sizable parallel market are also examined.
IMF Staff papers, Volume 39 No. 1 by International Monetary Fund. Research Dept. Pdf
This paper focuses on exchange rate economics. Two main views of exchange rate determination have evolved since the early 1970s: the monetary approach to the exchange rate (in flexible-price, sticky-price, and real interest differential formulations); and the portfolio balance approach. In this paper, the literature on these views is surveyed, followed by a discussion of the empirical evidence and likely future developments in the area of exchange rate determination. The literature on foreign exchange market efficiency, exchange rates and “news,” and international parity conditions is also reviewed.
IMF Staff papers by International Monetary Fund. Research Dept. Pdf
This paper examines the role of the labor market in the transmission process of adjustment policies in developing countries. It begins by reviewing the recent evidence regarding the functioning of these markets. It then studies the implications of wage inertia, nominal contracts, labor market segmentation, and impediments to labor mobility for stabilization policies. The effect of labor market reforms on the flexibility of the labor market and the evidence regarding the wage and employment effects of trade reform are discussed next. The last part of the paper identifies a variety of issues that may require further investigation.
Author : International Monetary Fund Publisher : International Monetary Fund Page : 132 pages File Size : 43,7 Mb Release : 2004-05-19 Category : Business & Economics ISBN : 9781498330282
IMF Staff Papers by International Monetary Fund. Research Dept. Pdf
This paper highlights various problems and policies related to latent inflation. Disappointment will undoubtedly be widespread if, after 10 years of inflation control, latent inflation is permitted to become active and there is a considerable rise in prices. It is not unlikely that some governments will feel they simply cannot accept such a policy. However, the prospect of wiping out or working off latent inflation in any moderate period is very slight. There is every reason to deal with the latent inflation as far as possible by absorbing it through taxation and by measures to reduce liquidity. At the same time, with increased output it should be possible to work off part of the latent inflation. Even if it becomes generally recognized that all or most of such inflation cannot be wiped out or worked off, its immediate activation may be unwise. At some stage soon, governments must face the difficulties presented by latent inflation and recognize that a comprehensive program for dealing with it must be put into effect. Unless such programs are adopted, there can be no great confidence that international payments problems can be solved simply by imposing more rigorous and more extensive controls.
Author : International Monetary Fund Publisher : International Monetary Fund Page : 34 pages File Size : 42,5 Mb Release : 2021-05-06 Category : Business & Economics ISBN : 9781513573694
An Empirical Assessment of the Exchange Rate Pass-through in Mozambique by International Monetary Fund Pdf
Determining the magnitude and speed of the exchange rate passthrough (ERPT) to inflation has been of paramount importance for policy-makers in developed and emerging economies. This paper estimates the exchange rate passthrough in Mozambique using econometric techniques on a sample spanning from 2001 to 2019. Results suggest that the ERPT is assymetric, sizable and fast, with 50 percent of the exchange rate variations passing through to prices in less than six months. Policy-makers should continue to pursue low and stable inflation and develop a strong track record of prudent macroeconomic policies for the ERPT to decline.
Exchange Rate Misalignment in Developing Countries by Sebastian Edwards,World Bank Pdf
This article analyzes the theory of equilibrium real exchange rates and defines misalignment as a deviation of the real exchange rate (RER) from its equilibrium level. The role of macroeconomic policies is then analyzed under three alternative nominal exchange rate regimes: predetermined nominal exchange rates; floating nominal rates; and dual or black market nominal exchange rates. This discussion points out how inconsistent macroeconomic policies often lead to real exchange rate misalignment. Corrective measures, including nominal devaluation and several alternative approaches, are then evaluated.
Parallel Exchange Rates in Developing Countries by Miguel A. Kiguel,J. Saul Lizondo,Stephen A. O'Connell Pdf
'...the most definitive study of the subject, assembling an all-star cast to address the many outstanding questions and succeeding beyond expectations in combining elegant theory and state of the art econometrics to reach very sensible policy conclusions.' - Mohsin S. Khan, Deputy Director, Research Department, International Monetary Fund ' This book fills an important vacuum in the literature of the economic consequences of parallel markets and should prove of great value to students of economic development and to policy-makers in developing countries as they struggle to reform their exchange rate and trade incentive systems. Here they will find all that they need to know.' - Vittorio Corbo, Professor of Economics, Universidad Catolica de Chile 'A most comprehensive treatment of the relationships between parallel foreign exchange markets and macroeconomic policies, both across countries and over time. The book substantially enhances our understanding of how these systems work in practice and will be of great interest to policy-makers, researchers and graduate students of economic policy.' - Samuel M. Wangwe, Professor of Economics, University of Dar es Salaam and Executive Director, Economic and Social Research Foundation, Dar es Salaam, Tanzania This book examines extensive empirical evidence on the macroeconomic implications of parallel exchange rates in developing countries. Eight case-studies from Africa, Latin America, and Turkey provide detailed evidence on the emergence of parallel exchange rates, their impact on macroeconomic performance, and the criteria for successful exchange-rate unification. A chapter on European dual exchange rates summarizes the contrasting experience of industrial countries. An overview chapter lays out the analytical framework, assesses the evidence, and draws policy conclusions.
Dominant Currency Paradigm: A New Model for Small Open Economies by Camila Casas,Mr.Federico Diez,Gita Gopinath,Pierre-Olivier Gourinchas Pdf
Most trade is invoiced in very few currencies. Despite this, the Mundell-Fleming benchmark and its variants focus on pricing in the producer’s currency or in local currency. We model instead a ‘dominant currency paradigm’ for small open economies characterized by three features: pricing in a dominant currency; pricing complementarities, and imported input use in production. Under this paradigm: (a) the terms-of-trade is stable; (b) dominant currency exchange rate pass-through into export and import prices is high regardless of destination or origin of goods; (c) exchange rate pass-through of non-dominant currencies is small; (d) expenditure switching occurs mostly via imports, driven by the dollar exchange rate while exports respond weakly, if at all; (e) strengthening of the dominant currency relative to non-dominant ones can negatively impact global trade; (f) optimal monetary policy targets deviations from the law of one price arising from dominant currency fluctuations, in addition to the inflation and output gap. Using data from Colombia we document strong support for the dominant currency paradigm.
