Working papers, Department of Economics, WU (Wirtschaftsuniversität Wien)
Exchange Rate-Based Stabilization: Pleasant Monetary Dynamics?
Abstract: High inflation economies have ultimately been successful
in stabilising their prices using the exchange rate as a nominal anchor.
Besides stabilization, these recent examples have shown boom-recession
cycles, contrary to what can be expected from (pure) money-based
stabilizations. Various theoretical explanations of such boom-cycles are
discussed and a model of aggregate supply and demand generating such an
outcome is developed. There the boom dynamics depend mainly on a slump in
real interest rates and wage flexibility.
Keywords: Macroeconomic modelling; exchange rate-based stabilization; high inflation; Latin America.; (follow links to similar papers)
JEL-Codes: E10; E31; E52; E63; (follow links to similar papers)
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