Modern exchange-rate regimes, stabilisation programmes and co-ordination of macroeconomic policies: recent experiences of selected developing Latin American economies
This book analyzes the phenomenon of macroeconomic adjustment with special emphasis on selected Latin American countries facing stabilisation programmes. It provides a historical description of the origins, functioning and collapse of exchange-rate regimes from the international classical gold standard period to modern arrangements. The author supports the argument that systemic asymmetries in the worldwide adjustment mechanism are inherent in the international monetary system. The recent theoretical literature dealing with the rules vs. discretion debate and its interaction with the credibility issue is reviewed. This topic is intrinsically related to the dispute over the appropriate role of exchange-rate anchors in disinflation programmes. Against a background of academic dispute between advocates of exchange-rate prescriptions and monetary conceptions, the contrasting views of different theorists regarding the choice of exchange-rate regimes are presented and assessed. Finally, a comparative analysis of recent experiments in Argentina, Brazil, Chile and Mexico with exchange-rate based disinflation stabilisation programmes is undertaken. The problems that have arisen while establishing new institutional arrangements, such as new currency or a policy rule for monetary base creation, are examined.
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Origins and Functioning of Modern ExchangeRate Regimes
Systemic Asymmetries Inherent in the International
Revisiting the Rules
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According analysis Argentina argued argument assets balance of payments band behaviour Brazil Brazilian Bretton Woods Bretton Woods system Britain Calvo capital inflows central bank changes Chapter Chile credibility crises currency board debt deficit devaluation developing countries discretionary discussion disinflation dollar domestic currency economists economy effects Eichengreen equilibrium ERBSP exchange-rate arrangements exchange-rate regimes exchange-rate-based expectations experience exports external Figure fiscal fixed exchange rate fixed exchange-rate floating exchange rates flows fluctuations foreign reserves fundamentals global globalisation gold standard growth ibid implemented important increase inflation rates interest rates investment issue Krugman Latin American countries liquidity long-run macroeconomic markets MERCOSUR Mexican crisis Mexico monetary authorities monetary base monetary policy money supply neutral neutrality of money nominal anchor non-neutral overvaluation parity pegged percent period policymakers problem real exchange rate rules sector shocks short-run speculative attacks stabilisation policies stabilisation programmes stability sterilisation target target bands theorists trade volatility