Exchange rate-based stabilization. Pleasant monetary dynamics?

Gert D. Wehinger

Publication: Working/Discussion PaperWU Working Paper

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)
Original languageEnglish
Place of PublicationVienna
PublisherInst. für Volkswirtschaftstheorie und -politik, WU Vienna University of Economics and Business
Publication statusPublished - 1997

Publication series

NameDepartment of Economics Working Paper Series
No.50

WU Working Paper Series

  • Department of Economics Working Paper Series

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