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Exchange rates as nominal anchors

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Abstract

Exchange Rates as Nominal Anchors. - 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 residual inertia is maintained in some contracts, real exchange rate overvaluation will result. Data from Chile, Mexico and Yugoslavia are used to test the implications of the model. The second part deals with the long run, and uses a 56 countries data set to investigate whether fixed exchange rates have been associated with greater financial discipline.

Zusammenfassung

Wechselkurse als nominaler Anker. - In diesem Aufsatz wird die Verwendung nominaler Wechselkurse als nominale Anker in Stabilisierungsprogrammen diskutiert. Der erste Teil behandelt die Dynamik von Inflationen in stark indexierten Volkswirtschaften. Es wird gezeigt, daβ glaubwürdige Wechselkurs-Anker das Inflationstempo bremsen. Wenn aber von diesem Tempo noch etwas in einigen Verträgen erhalten geblieben ist, wird sich ein überbewerteter Wechselkurs ergeben. Um die Implikationen des Modells zu prüfen, werden Daten aus Chile, Mexiko und Jugoslawien benutzt. Der zweite Teil des Aufsatzes ist auf langfristige Zusammenhänge ausgerichtet und verwendet Daten aus 56 Ländern, um zu untersuchen, ob feste Wechselkurse mit einer gröβeren finanziellen Disziplin verbunden gewesen sind.

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  1. Sebastian Edwards
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Edwards, S. Exchange rates as nominal anchors. Weltwirtschaftliches Archiv 129, 1–32 (1993). https://doi.org/10.1007/BF02707485

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