Currency Crises and Monetary Policy in Economies with Partial Dollarisation of Liabilities

Arbeitspapier

The right response to a speculative attack on the domestic currency by monetary authorities in a country with liabilities in US dollars has been a matter of hot debate among academics and policy makers especially after the East Asian Crisis. Using a modified version of the currency crisis model discussed in Proano, Flaschel and Semmler (2005) the authors show that an increase of the domestic interest rate by the central bank as a response to the speculative attack can have serious negative effects on aggregate demand by depressing the investment activity of those domestic firms which are not indebted in foreign currency. The authors demonstrate that in specific situations the standard (IMF supported) increase of the domestic interest rate might not be the best response to a speculative attack on the domestic currency from a medium term point of view.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: IMK Working Paper ; No. 5/2006

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Price Level; Inflation; Deflation ; Business Fluctuations; Cycles ; Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications ; Monetary Policy
• Thema: Mundell-Fleming-Tobin model ; liability dollarisation ; debt-financed investment ; financial crisis ; currency crisis ; deflation.

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Flaschel, Peter ; Proaño, Christian ; Semmler, Willi
• Ereignis: Veröffentlichung
• (wer): Hans-Böckler-Stiftung, Institut für Makroökonomie und Konjunkturforschung (IMK)
• (wo): Düsseldorf
• (wann): 2006

Weitere Informationen

• Handle: http://hdl.handle.net/10419/105881
• URN: urn:nbn:de:101:1-20080814167
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ