publication . Preprint . 2010

A Case for Intermediate Exchange-Rate Regimes

Agnès Bénassy-Quéré; Véronique Salins;
Open Access
  • Published: 01 Aug 2010
Abstract
Despite increasing capital mobility and the subsequent difficulty in controlling exchange rates, intermediate exchange-rate regimes have remained widespread, especially in emerging and developing economies. This piece of evidence hardly fits the "impossible Trinity" theory arguing that it becomes difficult to control the exchange rate without a "hard" device when capital flows are freed. Calvo and Reinhart (2000) have suggested several explanations for such "fear of floating": exchange rate pass-through, liability dollarization, dollar invoicing of domestic and external transactions, and an underdeveloped market for currency hedging make it more desirable to sta...
Subjects
free text keywords: EXCHANGE RATE REGIME;DSGE MODEL;IMS;G20;G20, jel:F33, jel:F41, jel:F42, jel:F50
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