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Exchange rate policy in developing countries


  • Corden, W. Max


A distinction can be made between two approaches to exchange rate policy in developing countries. The"real targets"and the"nominal anchor"approach. Part I of this report gives an overview of the two approaches and the assumptions they imply. Part II expounds the"real targets"approach and its implications in some detail. This is really the approach that is now orthodox. Part III expounds the"nominal anchor"approach and its implications, and considers to what extent it might explain the low inflation experiences of the many countries where exchange rates have been (more or less) fixed for long periods. Part IV considers the implications of increasing capital mobility for exchange rate policy, and Part V has some conclusions for policy. The paper draws on examples of exchange rate policies and experiences of a group of seventeen developing countries.

Suggested Citation

  • Corden, W. Max, 1990. "Exchange rate policy in developing countries," Policy Research Working Paper Series 412, The World Bank.
  • Handle: RePEc:wbk:wbrwps:412

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    References listed on IDEAS

    1. Duryea, Suzanne & Hoek, Jasper & Lam, david & Levison, Deborah, 2005. "Dynamics of child labor : labor force entry and exit in urban Brazil," Social Protection and Labor Policy and Technical Notes 32744, The World Bank.
    2. Lorenzo Guarcello & Fabrizia Mealli & Furio Rosati, 2010. "Household vulnerability and child labor: the effect of shocks, credit rationing, and insurance," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(1), pages 169-198, January.
    3. Kaushik Basu & Zafiris Tzannatos, 2003. "The Global Child Labor Problem: What Do We Know and What Can We Do?," World Bank Economic Review, World Bank Group, vol. 17(2), pages 147-173, December.
    4. Rajeev Dehejia & Roberta Gatti, 2002. "Child Labor: The Role of Income Variability and Access to Credit Across Countries," NBER Working Papers 9018, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Eugenio Diaz Bonilla & Hector E. Schamis, 1999. "The Political Economy of Exchange Rate Policies in Argentina," Research Department Publications 3078, Inter-American Development Bank, Research Department.
    2. Prema-chandra Athukorala & Sarath Rajapatirana, 1991. "The Domestic Financial Market and the Trade Liberalization Outcome: The Evidence from Sri Lanka," Research Papers 1991.01, School of Economics, La Trobe University.
    3. Devarajan, Shantayanan & Rodrik, Dani, 1991. "Do the benefits of fixed exchange rates outweigh their costs? The Franc Zone in Africa," Policy Research Working Paper Series 777, The World Bank.
    4. Eugenio Diaz Bonilla & Hector E. Schamis, 1999. "La economía política de las políticas de cambio en Argentina," Research Department Publications 3079, Inter-American Development Bank, Research Department.


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