G2TT
来源类型Discussion paper
规范类型论文
来源IDDP199
DP199 On the Effectiveness of Discrete Devaluation in Balance of Payments Adjustments
Louka Tarsitsa Katseli
发表日期1987-09-01
出版年1987
语种英语
摘要In the context of monopolistic price adjustment and price setting behavior on the part of firms, it is shown that a large discrete adjustment of the nominal exchange rate as opposed to a crawling peg is likely to result in faster adjustment of domestic prices. This is the case because an increase in the variance of exchange rate changes, associated with a policy of discrete devaluation, strengthens expectations about faster incipient increases of competitors' prices and thus of local demand as well as of marginal costs. The above hypothesis is empirically tested on Greek monthly data and seems to be validated by the empirical evidence presented. Specifically, the variance of exchange rate changes proves to be an important independent variable in explaining domestic price adjustment. These results confirm the underlying policy hypothesis that the effectiveness of exchange rate policy in balance-of-payment adjustment is a function not only of economic fundamentals but of exchange-rate management in so far as the latter affects the expectations of private market participants.
主题International Macroeconomics
关键词Crawling peg Discrete devaluation Exchange rates Greece Price adjustment
URLhttps://cepr.org/publications/dp199
来源智库Centre for Economic Policy Research (United Kingdom)
资源类型智库出版物
条目标识符http://119.78.100.153/handle/2XGU8XDN/529355
推荐引用方式
GB/T 7714
Louka Tarsitsa Katseli. DP199 On the Effectiveness of Discrete Devaluation in Balance of Payments Adjustments. 1987.
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