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Living with flexible exchange rates:

Author

Listed:
  • corrinne ho

    (bank for international settlements)

  • robert n mccauley

    (bank for international settlements)

Abstract

This overview paper examines two main issues. The first is why the exchange rate matters, especially for emerging market economies. The second is under what circumstances and how countries have dealt with the challenges posed by the exchange rate in recent years in the context of inflation targeting. We find that emerging market economies, being more exposed to the influence of the exchange rate, are likely to accord the exchange rate a bigger role in policy assessment and decision-making. However, even with the greater emphasis on the exchange rate, the emerging market economies under review have not acted in contradiction to their announced inflation targets. Furthermore, recent experience shows that having to keep an eye on the exchange rate is also a fact of life in industrial economies, inflation targeting or not.

Suggested Citation

  • corrinne ho & robert n mccauley, 2004. "Living with flexible exchange rates:," International Finance 0411003, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpif:0411003
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    References listed on IDEAS

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    More about this item

    Keywords

    inflation targeting emerging markets exchange rate;

    JEL classification:

    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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