Exchange rate-based stabilization. Pleasant monetary dynamics?

Gert D. Wehinger

Publikation: Working/Discussion PaperWU Working Paper

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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. (author's abstract)

Publikationsreihe

ReiheDepartment of Economics Working Paper Series
Nummer50

WU Working Paper Reihe

  • Department of Economics Working Paper Series

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