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Flexible Exchange Rates and Interdependence [with Comments] (Taux de change flexibles et interdépendance) (Tipos de cambio flexibles e interdependencia)

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Author Info

  • Rudiger Dornbusch

    (International Monetary Fund)

  • Ernesto Hernández-Catá

    (International Monetary Fund)

  • Willem H. Buiter

    (International Monetary Fund)

Abstract

The paper reviews the channels of macroeconomic interdependence under flexible exchange rates. The model emphasizes the linkage of international capital markets, expectations, and nominal and real wage stickiness in affecting the impact of disturbances on employment, prices, and the exchange rate. The standard rational-expectations macroeconomic model is extended to facilitate analysis of the role of risk premiums created by imperfect asset substitutability. Peso problems and bubbles are discussed briefly. In a discussion of third-country effects, the paper addresses the implications tight money has for developing countries. These countries are affected by adverse effects of increased real interest rates on their debt, by reduced real prices of their commodity exports owing to decreased demand and the real appreciation of the dollar, and by reduced demand for their manufactured exports. The paper discusses two alternative proposals designed to deal with the exchange rate implications of policy interdependence. One is the McKinnon proposal for world monetarism; the other is the band proposal. Both proposals are rejected because they fail to cope with the problems of the transition to a low, common inflation rate. The paper concludes with the suggestion that improved performance of the world economy cannot come from a better exchange rate system but rather from a more systematic use of incomes policies. /// L'étude traite des mécanismes de transmission de l'interdépendance macroéconomique en régime de taux de change flexibles. Le modèle souligne le rôle joué par le lien qui existe entre les marchés de capitaux internationaux, les anticipations et l'inflexibilité à la baisse des salaires nominaux et réels dans la transmission des perturbations économiques sur l'emploi, les prix et le taux de change. Le modèle macroéconomique type fondé sur les anticipations rationnelles est élargi de facon à faciliter l'analyse du rôle des primes de risque créées par la substituabilité imparfaite des avoirs. Les problèmes que posent le peso et les vagues d'extrême spéculation sont examinés brièvement. Abordant les effets ressentis par les pays tiers, l'auteur de l'étude examine les implications d'une politique monétaire restrictive pour les pays en développement; cette politique exerce sur eux des effets défavorables étant donné qu'elle relève les taux d'intérêt réels de leur dette, qu'elle abaisse les prix réels de leurs exportations de produits primaires du fait de l'affaiblissement de la demande et de l'appréciation réelle du dollar, et qu'elle réduit la demande portant sur leurs exportations de produits manufacturés. L'étude examine deux propositions visant à remédier aux incidences de l'interdépendance des politiques économiques sur le système des changes. La première est celle de McKinnon, qui préconise un monétarisme mondial, et la seconde appuie l'établissement de marges de fluctuation. L'auteur rejette ces deux propositions car elles ne permettent pas, à son avis, de résoudre les problèmes que pose le passage à un taux d'inflation commun modéré. Il conclut qu'une amélioration de la performance de l'économie mondiale ne résulterait sans doute pas de l'adoption d'un meilleur système de change mais plutôt d'un recours plus systématique aux politiques de revenus. /// En este artículo se examinan los cauces de interdependencia macroeconómica en un régimen de tipos de cambio flexibles. El modelo destaca la vinculación entre los mercados internacionales de capital, las expectativas y la inflexibilidad de los salarios nominales y reales como factor que afecta al impacto de las perturbaciones en el empleo, los precios y el tipo de cambio. Se amplía el modelo macroeconómico normal de expectativas racionales a fin de facilitar el análisis de la función de las primas de riesgo creadas por la sustituibilidad imperfecta de los activos. Se examinan brevemente los problemas de "pesos" y de "burbujas". En un análisis de los efectos en terceros países se hace alusión a la importancia que tiene la política de dinero escaso para los países en desarrollo. Estos países resultan afectados por los efectos adversos del alza del tipo de interés real que se les cobra por su deuda, el descenso del precio real de sus exportaciones de productos básicos debido a una menor demanda y a la apreciación real del dólar, y por una menor demanda de sus exportaciones de manufacturas. Se examinan dos propuestas alternativas para hacer frente a la repercusión de la interdependencia de las medidas de política en el tipo de cambio. Una de ellas es la propuesta de McKinnon de un monetarismo mundial; la otra es la propuesta de bandas de fluctuación. Se rechazan ambas propuestas porque no logran resolver los problemas de la transición a una tasa de inflación baja y general. Finalmente se sugiere que el mejoramiento de la economía mundial no puede basarse en un mejor sistema de tipos de cambio sino en una aplicación más sistemática de políticas de ingresos.

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Bibliographic Info

Article provided by Palgrave Macmillan in its journal Staff Papers - International Monetary Fund.

Volume (Year): 30 (1983)
Issue (Month): 1 (March)
Pages: 3-38

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Handle: RePEc:pal:imfstp:v:30:y:1983:i:1:p:3-38

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Cited by:
  1. Fels, Joachim, 1990. "Flexible exchange rates and insulation: A reexamination," Kiel Working Papers 444, Kiel Institute for the World Economy.
  2. Schweickert, Rainer, 1994. "Regional integration: A worthwhile strategy for catching up?," Kiel Working Papers 623, Kiel Institute for the World Economy.
  3. Schweickert, Rainer, 1991. "Efficient real exchange rate adjustment in developing countries: alternative devaluation strategies, economic structure, and sequencing of reforms," Kiel Working Papers 473, Kiel Institute for the World Economy.
  4. Schweickert, Rainer, 1994. "Macroeconomic reforms in the Southern cone: lessons for developing and newly emerging market economies," Kiel Working Papers 614, Kiel Institute for the World Economy.

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