Normal view MARC view

Price and trade effects of exchange rates fluctuations and the design of policy coordination

Author: Wyplosz, Charles ; Cohen, D.INSEAD Area: Economics and Political ScienceIn: Journal of International Money and Finance, vol. 14, no. 3, 1995 Language: EnglishType of document: INSEAD ArticleNote: Please ask the Library for this articleAbstract: We analyze a two-country zone facing a joint inflationary shock and responding with coordinated and uncoordinated monetary and fiscal policies. We show that the standard presumption that the absence of coordination results in an excessive exchange rate appreciation of the zone with respect to the rest of the world hinges on a specific assumption: within the two countries considered, the price effect of exchange rate fluctuations dominates the trade effects relative to the corresponding effects via-il-vis the rest of the world. If the relative hierarchy goes the other way around (as we argue is likely for EC countries), the standard conclusion is reversed, a result of insufficiently active monetary and fiscal policies. The paper also considers asymmetric shocks as well as monetary policy coordination.
Tags: No tags from this library for this title. Add tag(s)
Log in to add tags.
Item type Current location Call number Status Date due
INSEAD Article Doriot Library
Available

Please ask the Library for this article

We analyze a two-country zone facing a joint inflationary shock and responding with coordinated and uncoordinated monetary and fiscal policies. We show that the standard presumption that the absence of coordination results in an excessive exchange rate appreciation of the zone with respect to the rest of the world hinges on a specific assumption: within the two countries considered, the price effect of exchange rate fluctuations dominates the trade effects relative to the corresponding effects via-il-vis the rest of the world. If the relative hierarchy goes the other way around (as we argue is likely for EC countries), the standard conclusion is reversed, a result of insufficiently active monetary and fiscal policies. The paper also considers asymmetric shocks as well as monetary policy coordination.

Digitized

There are no comments for this item.

Log in to your account to post a comment.
Koha 3.18 - INSEAD Library Catalogue
Library Home | Contact Us | What's Koha?