Macroeconomic imbalances and exchange rate regime shifts

Arbeitspapier

This paper uses a dynamic stochastic rational expectations model of a small open economy to shed some light on factors determining exits from a fixed to a flexible exchange rate regime. Exits are in the model determined by a concern for macroeconomic stabilization. If cost-push shocks are important relative to demand shocks exits should occur more likely in times of low consumption and output, high interest rates, negative asset holdings, current account deficits, high inflation and high domestic prices. If the policy maker is more sensitive to negative rather than positive output deviations the probability of exits increases overall and is tilted toward exits with accompanying depreciation.

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• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Working Paper ; No. 2007:4

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems ; Financial Markets and the Macroeconomy ; Money and Interest Rates: Forecasting and Simulation: Models and Applications
• Thema: exchange rates ; exchange rate regimes ; rational expectations model ; Wirtschaftslage ; Wechselkurspolitik ; Rationale Erwartung ; Dynamisches Modell

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Post, Erik
• Ereignis: Veröffentlichung
• (wer): Uppsala University, Department of Economics
• (wo): Uppsala
• (wann): 2007

Weitere Informationen

• Handle: http://hdl.handle.net/10419/82698
• URN: urn:nbn:se:uu:diva-25356