Macroeconomic Implications of Real Exchange Rate Targeting in Developing Countries

Montiel, Peter

This paper analyzes the macroeconomic effects of a variety of exogenous and policy-induced real disturbances when the authorities target the level of the real exchange rate. It first discusses the implications--particularly for inflation and the current account--of targeting the rate at an “overdepreciated” level. The paper then examines the dynamic response of both output and inflation to a number of shocks. Further applications of the model, particularly as regards fiscal explanations of inflation, high-inflation plateaus, and money-based stabilization programs, are also considered

MoreLess

Year of publication:	1991
Authors:	Montiel, Peter
Other Persons:	Ostry, Jonathan David (contributor) ; Montiel, Peter (contributor)
Publisher:	Washington, D.C : International Monetary Fund
Subject:	Entwicklungsländer \| Developing countries \| Kaufkraftparität \| Purchasing power parity \| Wechselkurspolitik \| Exchange rate policy