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Exchange rate regime proposal for emerging countries: a Keynesian perspective

  • Fernando Ferrari-Filho
  • Luiz Fernando De Paula

This paper presents, in light of Keynesian theory and taking into account the emerging economies' reality in today's global world, an exchange rate regime proposal for emerging countries with the capability to mitigate their external vulnerability and fragility and their dependence on foreign capital, thus making possible the implementation of domestic economic policies that would permit macroeconomic stabilization—understood, following Keynes, as being the combination of price stability and full employment. For this purpose, the paper revisits Keynes's proposals with regard to both exchange rate policy and capital inflows, with a view to showing how they contribute to maintaining full employment, develops a Post Keynesian view on financial globalization and the behavior of exchange rate, and presents a strategy for an exchange rate regime with capital controls for emerging countries.

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Article provided by M.E. Sharpe, Inc. in its journal Journal of Post Keynesian Economics.

Volume (Year): 31 (2008)
Issue (Month): 2 (December)
Pages: 227-248

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Handle: RePEc:mes:postke:v:31:y:2008:i:2:p:227-248
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  13. Antonio J. Alves, Jr. & Fernando Ferrari, Jr. & Luiz F. R. De Paula, 2000. "The Post Keynesian Critique of Conventional Currency Crisis Models and Davidson's Proposal to Reform the International Monetary System," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 22(2), pages 207-225, January.
  14. Guillermo Calvo & Frederic S. Mishkin, 2003. "The Mirage of Exchange Rate Regimes for Emerging Market Countries," NBER Working Papers 9808, National Bureau of Economic Research, Inc.
  15. Murray Glickman, 1994. "The Concept of Information, Intractable Uncertainty, and the Current State of the "Efficient Markets" Theory: A Post Keynesian View," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 16(3), pages 325-349, April.
  16. M S Mohanty & Michela Scatigna, 2005. "Has globalisation reduced monetary policy independence?," BIS Papers chapters, in: Bank for International Settlements (ed.), Globalisation and monetary policy in emerging markets, volume 23, pages 17-58 Bank for International Settlements.
  17. Grabel, Ilene, 1996. "Marketing the third world: The contradictions of portfolio investment in the global economy," World Development, Elsevier, vol. 24(11), pages 1761-1776, November.
  18. Philip Arestis & Luiz Fernando de Paula & Fernando Ferrari-Filho, 2006. "Inflation Targeting In Emerging Countries: The Case Of Brazil," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 42, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
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