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Real Exchange Rate Targeting Under Imperfect Asset Substitutability

This paper presents a model of an economy that uses nominal exchange rate policy to keep the real exchange rate constant at a certain target level, under imperfect asset substitutability. The paper discusses the determinants of inflation under such a policy, and examines the consequences of exogenou...

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Bibliographic Details
Main Author: Lizondo, José Saúl
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 1993
Series:IMF Working Papers
Subjects:
Public Finance & Taxation
Real Exchange Rates
Finance, Public
Inflation
Public-private Enterprises
Expenditures, Public
Public Finance
Price Level
Interest Rates
Public Sector
Prices
Policy Coordination
Foreign Exchange
Finance
Currency
Monetary Policy
Public Enterprises
Interest Rates: Determination, Term Structure, And Effects
Policy Objectives
Civil Service & Public Sector
Deflation
National Government Expenditures And Related Policies: General
Real Interest Rates
Policy Designs And Consistency
Banks And Banking
Expenditure
Macroeconomics
Open Economy Macroeconomics
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:This paper presents a model of an economy that uses nominal exchange rate policy to keep the real exchange rate constant at a certain target level, under imperfect asset substitutability. The paper discusses the determinants of inflation under such a policy, and examines the consequences of exogenous and policy-induced shocks on inflation, the external accounts, and the fiscal accounts. The shocks considered include changes in the real exchange rate target, changes in fiscal policy, changes in foreign interest rates, and open market sales of public sector domestic bonds
Physical Description:30 pages
ISBN:9781451845624

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