Arbeitspapier
The inflationary consequences or real exchange rate targeting via accumulation of reserves
The paper investigates the ability of monetary authorities to keep the real exchange rate undervalued over the long run by implementing a policy of accumulating foreign exchange reserves.We consider a model of a three-sector, small, open economy, where the central bank continuously purchases foreign currency reserves and compare them to Russian and Chinese economies in recent years.Both countries appear to pursue reserve accumulation policies.We find a clear trade-off between the steady state levels of the real exchange rate and inflation.After calibration, the model predicts an 8.5% real undervaluation of the Russian currency and a 13.7% undervaluation of the Chinese currency.Predicted inflation is found to match observed levels.
- ISBN
-
952-462-830-9
- Sprache
-
Englisch
- Erschienen in
-
Series: BOFIT Discussion Papers ; No. 11/2006
- Klassifikation
-
Wirtschaft
Monetary Policy
- Thema
-
Real exchange rate targeting
foreign exchange reserves
Dutch disease
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Sosunov, Kirill
Zamulin, Oleg
- Ereignis
-
Veröffentlichung
- (wer)
-
Bank of Finland, Institute for Economies in Transition (BOFIT)
- (wo)
-
Helsinki
- (wann)
-
2006
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
Dieses Objekt wird bereitgestellt von:
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Objekttyp
- Arbeitspapier
Beteiligte
- Sosunov, Kirill
- Zamulin, Oleg
- Bank of Finland, Institute for Economies in Transition (BOFIT)
Entstanden
- 2006
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