Credibility and Adjustment : Gold Standards versus Currency Boards
AbstractIt is often maintained that currency boards (CBs) and gold standards (GSs) are alike in that they are stringent monetary rules, the two basic features of which are high credibility of monetary authorities and the existence of automatic adjustment (non discretionary) mechanism. This article includes a comparative analysis of these two types of regimes both from the perspective of the sources and mechanisms of generating confidence and credibility, and the elements of operation of the automatic adjustment mechanism. Confidence under the GS is endogenously driven, whereas it is exogenously determined under the CB. CB is a much more asymmetric regime than GS (the adjustment is much to the detriment of peripheral countries) although asymmetry is a typical feature of any monetary regime. The lack of credibility is typical for peripheral countries and cannot be overcome completely even by “hard” monetary regimes.
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Bibliographic InfoPaper provided by Aix-Marseille Université, CERGAM in its series CAE Working Papers with number 11.
Length: 28 pages
Date of creation: Apr 2004
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Monetary regime; gold standards; currency boards;
Other versions of this item:
- Jean Baptiste Desquilbet & Nikolay Nenovsky, 2004. "Credibility and adjustment: gold standards versus currency boards," William Davidson Institute Working Papers Series 2004-692, William Davidson Institute at the University of Michigan.
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
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