Since 2014
Optimal Exchange Rate Policy and Business Cycles
Brazilian Review of Econometrics
View Archive Info| Field | Value | |
| Title |
Optimal Exchange Rate Policy and Business Cycles
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| Creator |
Cunha, Alexandre; Federal University of Rio de Janeiro
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| Subject |
exchange rate policy; business cycles
E32; F31; F41 |
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| Description |
Implementation and collapse of exchange rate pegging schemes are recurrent events. A currency crisis (pegging) is often followed by an economic downturn (boom). In this essay I study why a benevolent Central Bank should pursue a monetary policy that leads to those recurrent currency crises and subsequent periods of pegging. I show that the optimal policy induces a competitive equilibrium that displays a boom in periods of below average devaluation and a recession in periods of above average devaluation. Therefore, a currency crisis (pegging) can be understood as an optimal policy answer to a recession (boom).
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| Publisher |
Sociedade Brasileira de Econometria
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| Contributor |
CNPq
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| Date |
2013-09-12
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| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion — — |
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| Format |
application/pdf
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| Identifier |
http://bibliotecadigital.fgv.br/ojs/index.php/bre/article/view/14877
10.12660/bre.v33n12013.14877 |
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| Source |
Brazilian Review of Econometrics; Vol 33, No 1 (2013); 27-45
Brazilian Review of Econometrics; Vol 33, No 1 (2013); 27-45 1980-2447 |
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| Language |
eng
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| Relation |
http://bibliotecadigital.fgv.br/ojs/index.php/bre/article/view/14877/24764
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