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Transitional Exchange Rate Policy in a Low Per Capita Income Country


  • Goyal, A.


In our intertemporal optimizing model the equilibrium real exchange rate is determined by a sustainable balancing of the current and capital accounts of the balance of payments. Under perfect global capital mobility and managed exchange rate, a rise in expected depreciation of the exchange rate is associated with a fall in money balances. A real wage target translates into a real exchange rate target, that conflicts with the exchange rate required for the intertemporal balance of payments equilibrium.

Suggested Citation

  • Goyal, A., 1998. "Transitional Exchange Rate Policy in a Low Per Capita Income Country," Papers 147, Indira Gandhi Institute of Development Research-.
  • Handle: RePEc:fth:indgan:147

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    References listed on IDEAS

    1. Affleck-Graves, John & Hegde, Shantaram P & Miller, Robert E, 1994. " Trading Mechanisms and the Components of the Bid-Ask Spread," Journal of Finance, American Finance Association, vol. 49(4), pages 1471-1488, September.
    2. Bailey, DeeVon & Brorsen, B. Wade, 1989. "Price Asymmetry In Spatial Fed Cattle Markets," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(02), December.
    3. Stoll, Hans R, 1989. " Inferring the Components of the Bid-Ask Spread: Theory and Empirical Tests," Journal of Finance, American Finance Association, vol. 44(1), pages 115-134, March.
    4. von Cramon-Taubadel, Stephan, 1998. "Estimating Asymmetric Price Transmission with the Error Correction Representation: An application to the German Pork Market," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 25(1), pages 1-18.
    5. George, Thomas J & Kaul, Gautam & Nimalendran, M, 1991. "Estimation of the Bid-Ask Spread and Its Components: A New Approach," Review of Financial Studies, Society for Financial Studies, vol. 4(4), pages 623-656.
    6. Roll, Richard, 1984. " A Simple Implicit Measure of the Effective Bid-Ask Spread in an Efficient Market," Journal of Finance, American Finance Association, vol. 39(4), pages 1127-1139, September.
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    Cited by:

    1. Goyal, Ashima, 1998. "Labour Market Institutions, Real Wages and Macroeconomic Outcomes," MPRA Paper 67130, University Library of Munich, Germany.
    2. Goyal, Ashima, 1999. "The Political Economy of the Revenue Deficit," MPRA Paper 29980, University Library of Munich, Germany.

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    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange


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