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Establishing Credibility : Evolving Perceptions of the European Central Bank

Goldberg, Linda S. - 2010

The perceptions of a central bank's inflation aversion may reflect institutional structure or, more dynamically, the history of its policy decisions. In this paper, we present a novel empirical framework that uses high frequency data to test for persistent variation in market perceptions of...

Persistent link: https://www.econbiz.de/10012761892

European Exchange Rate Credibility Before the Fall

Rose, Andrew; Svensson, Lars E. O. - 2022

Realignment expectations which measure exchange rate credibility are analyzed for European exchange rates, using daily … expectations and macroeconomic variables, although there are signs that lower inflation improves credibility. Statistically, many … movements to realignment expectations are common to ERM participants. There were few indications of poor ERM credibility before …

Persistent link: https://www.econbiz.de/10013324139

Interest Rate Rules, Inflation Stabilization, and Imperfect Credibility : The Small Open Economy Case

Calvo, Guillermo - 2010

credibility EBRS is associated with overheating and current account deficits, IRRs give rise to somewhat opposite results … costs infringed by imperfect credibility …

Persistent link: https://www.econbiz.de/10012760044

Money-Based Versus Exchange Rate-Based Stabilization with Endogenous Fiscal Policy

Tornell, Aaron; Velasco, Andrés - 2021

We present a standard intertemporal model in which fiscal policy is determined by an optimizing but non-benevolent fiscal authority. If the fiscal authority is impatient, a money-based stabilization provides more fiscal discipline and higher welfare for the representative agent than does an...

Persistent link: https://www.econbiz.de/10013221928

What Happens When Countries Peg Their Exchange Rates? (The Real Side of Monetary Reforms)

Rebelo, Sérgio - 2021

There is a well-known set of empirical regularities that describe the experience of countries that peg their exchange rate as part of a macroeconomic adjustment program. Following the peg economies tend to experience an increase in GDP, a large expansion of production in the non-tradable sector,...

Persistent link: https://www.econbiz.de/10013228979

Exchange Rates as Nominal Anchors

Edwards, Sebastian - 2021

This paper discusses the use of nominal exchange rates as nominal anchors in stabilization programs. The first part deals with the dynamics of inflation in highly indexed economies. It is shown that credible exchange rate anchors will reduce the degree of inflationary inertia. However, if some...

Persistent link: https://www.econbiz.de/10013216865

Nominal Anchor Exchange Rate Policies as a Domestic Distortion

Krueger, Anne O. - 2022

This paper analyzes a nominal anchor exchange rate policy as a domestic distortion, in the tradition of international trade theory. It is shown that, in addition to the problems of sustainability and exit pinpointed in the exchange rate literature, a nominal anchor exchange rate policy, while in...

Persistent link: https://www.econbiz.de/10013323571

When are Fixed Exchange Rates Really Fixed?

Velasco, Andrés - 2021

This paper analyzes the sustainability of fixed exchange rates by extending the Barro-Gordon framework to a fully dynamic context in which the level of a state variable (in this case debt) determines the payoffs available to the government at each point in time. The model yields the following...

Persistent link: https://www.econbiz.de/10013222968

Currency Substitution and the Fluctuations of Foreign-Exchange Reserves with Credibly Fixed Exchange Rates

Giovannini, Alberto - 2021

This paper studies the fluctuations of foreign exchange reserves under a regime of credibly fixed exchange rates. The paper considers a variety of assumptions on the determinants of money demand and currency substitution

Persistent link: https://www.econbiz.de/10013224196

An Options-Based Analysis of Emerging Market Exchange Rate Expectations : Brazil'S Real Plan, 1994-1997

Campa, José Manuel; Chang, P. H. Kevin; Refalo, James F. - 2021

credibility of the crawling peg' and target zone ( maxiband') regimes governing the exchange rate. Since we do not impose an … one of the first to use options data from an emerging market, finds that target zone credibility was poor prior to …

Persistent link: https://www.econbiz.de/10013224319