Monetary Policy Under Dual Exchange Rates
AbstractThis paper finds that the introduction of dual exchange rates gives the monetary authority greater independence from external constraints than it would otherwise enjoy. The monetary authority is able to influence the level of aggregate demand in the short run and to sterilize the effects of temporary foreign distrubances. In addition, the paper finds that dual rates insulate the domestic economy fully from foreign interest rate changes but do not provide insulation from speculative disturbances.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1424.
Date of creation: Aug 1984
Date of revision:
Publication status: published as Journal of International Money and Finance, vol. 3, no. 2, ppp. 195-208, August 1984.
Note: ITI IFM
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Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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Other versions of this item:
- Cumby, Robert E., 1984. "Monetary policy under dual exchange rates," Journal of International Money and Finance, Elsevier, Elsevier, vol. 3(2), pages 195-208, August.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cumby, Robert E., 1983. "Trade credit, exchange controls, and monetary independence : Evidence from the United Kingdom," Journal of International Economics, Elsevier, Elsevier, vol. 14(1-2), pages 53-67, February.
- Wen-ya Chang & Ching-chong Lai, 1998. "The dynamic unsubstitutability of sterilization operations and neutral-intervention operations under dual exchange rates," Journal of Economics, Springer, Springer, vol. 68(3), pages 235-253, October.
- Ching-chong Lai, 1990. "Exchange Rate Determination under Flexible and Two-Tier Exchange Rate Regimes," Eastern Economic Journal, Eastern Economic Association, vol. 16(2), pages 115-123, Apr-Jun.
- Stockman, Alan C & Hernandez D, Alejandro, 1988.
"Exchange Controls, Capital Controls, and International Financial Markets,"
American Economic Review, American Economic Association,
American Economic Association, vol. 78(3), pages 362-74, June.
- Alan C. Stockman & Alejandro Hernandez D., 1985. "Exchange Controls, Capital Controls, and International Financial Markets," NBER Working Papers 1755, National Bureau of Economic Research, Inc.
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