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Research Details

Exchange-Rate-Based Stabilizations: An Analysis of Competing Theories

Abstract

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 analyzed 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.

Type

Book Chapter

Author(s)

Sergio Rebelo, Carlos Vegh

Date Published

1995

Citations

Rebelo, Sergio, and Carlos Vegh. 1995. Exchange-Rate-Based Stabilizations: An Analysis of Competing Theories.

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