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Real Effects of Exchange-Rate-Based Stabilization: An Analysis of Competing Theories

  • Rebelo, Sérgio

This paper uses a unified analytical framework to assess, both qualitatively and quantitatively, the relevance of the different hypotheses that have been proposed to explain the real effects of exchange-rate-based stabilizations. The four major hypotheses analysed are: (i) the supply-side effects associated with an inflation decline; (ii) the perception that the exchange rate peg is temporary; (iii) the fiscal adjustments that tend to accompany the peg; and (iv) the existence of nominal rigidities in wages or prices.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1220.

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Date of creation: Aug 1995
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Handle: RePEc:cpr:ceprdp:1220
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  12. Rebelo, Sérgio, 1997. "What Happens When Countries Peg Their Exchange Rates? (The Real Side of Monetary Reforms)," CEPR Discussion Papers 1692, C.E.P.R. Discussion Papers.
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  14. Stockman, A.C. & Ohnian, L.E., 1993. "Short-Run Independence of Monetary Policy Under Pagged Exchange Rates and Effects of Money on Exchange Rates and Interest Rates," RCER Working Papers 361, University of Rochester - Center for Economic Research (RCER).
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  18. De Gregorio, Jose & Guidotti, Pablo E & Vegh, Carlos A, 1998. "Inflation Stabilisation and the Consumption of Durable Goods," Economic Journal, Royal Economic Society, vol. 108(446), pages 105-31, January.
  19. Correia, Isabel & Neves, Joao C & Rebelo, Sérgio, 1994. "Business Cycles in a Small Open Economy," CEPR Discussion Papers 996, C.E.P.R. Discussion Papers.
  20. Kiguel, Miguel A., 1989. "Inflation in Argentina : stop and go since the Austral plan," Policy Research Working Paper Series 162, The World Bank.
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  24. Pierre-Richard Agénor, 1994. "The Behavior of Real Interest Rates in Exchange-Rate Based Stabilization Programs," IMF Working Papers 94/75, International Monetary Fund.
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  28. Rodriguez, Carlos Alfredo, 1982. "The Argentine stabilization plan of December 20th," World Development, Elsevier, vol. 10(9), pages 801-811, September.
  29. Greenwood, Jeremy & Hercowitz, Zvi & Huffman, Gregory W, 1988. "Investment, Capacity Utilization, and the Real Business Cycle," American Economic Review, American Economic Association, vol. 78(3), pages 402-17, June.
  30. Guillermo Calvo & Carlos A. Végh Gramont, 1991. "Exchange-Rate-Based Stabilization under Imperfect Credibility," IMF Working Papers 91/77, International Monetary Fund.
  31. Jorge Roldos, 1993. "On Credible Disinflation," IMF Working Papers 93/90, International Monetary Fund.
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  34. Calvo, Guillermo A, 1986. "Temporary Stabilization: Predetermined Exchange Rates," Journal of Political Economy, University of Chicago Press, vol. 94(6), pages 1319-29, December.
  35. Agenor, Pierre-Richard, 1998. "The Behavior of Real Interest Rates in Exchange-Rate-Based Stabilization Programs," Review of Development Economics, Wiley Blackwell, vol. 2(3), pages 231-49, October.
  36. Fischer, Stanley, 1977. "Long-Term Contracts, Rational Expectations, and the Optimal Money Supply Rule," Journal of Political Economy, University of Chicago Press, vol. 85(1), pages 191-205, February.
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  38. Frenkel, Jacob A & Razin, Assaf, 1986. "Fiscal Policies in the World Economy," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 564-94, June.
  39. Mendoza, Enrique G, 1991. "Real Business Cycles in a Small Open Economy," American Economic Review, American Economic Association, vol. 81(4), pages 797-818, September.
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