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Exchange Rate Unification Under Non-Credibility: The Haïtian Economy

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  • Kathleen Dorsainvil

Abstract

This paper builds on three strands of literature—Early Warning Systems (EWS), parallel exchange rates, and collapsing exchange rate regimes—by addressing the issue of credibility in the context of unification of the exchange rate in the Haïtian economy. It takes the view that when policymakers are perceived as non-credible, economic agents resort to observation of the economy's performance to assess the imminence of reforms. They then readjust their own behavior, particularly in the area of asset holdings. This paper models the adjustment process using the EWS ratios. Data supports the idea that credibility of the reform mounts over time reaching 85 percent on the eve of the reform. Copyright Springer Science+Business Media, Inc. 2006

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  • Kathleen Dorsainvil, 2006. "Exchange Rate Unification Under Non-Credibility: The Haïtian Economy," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 12(2), pages 229-240, May.
    • Handle: RePEc:kap:iaecre:v:12:y:2006:i:2:p:229-240:10.1007/s11294-006-9006-6
    DOI: 10.1007/s11294-006-9006-6
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    More about this item

    Keywords

    E58; F31; O54;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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