A Noteon Dual Foreign Exchange Markets with official Rationing: Predetermined Versus Floating official Exchange Rate

March 1, 1991

Preview Citation

Format: Chicago

José Saúl Lizondo. A Noteon Dual Foreign Exchange Markets with official Rationing: Predetermined Versus Floating official Exchange Rate, (USA: International Monetary Fund, 1991) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the relationship between the long run rate of inflation and the allocation of transactions between markets in economies that operate dual exchange market regimes and ration foreign exchange in the official market. It shows that wider access of importers to the official market, and wider access of exporters to the free market, are associated with higher rates of inflation and vice versa. The direction of causality among the various variables, and thus the effects of economic policies, depend on whether the official exchange rate is predetermined or floating.

Subject: Currency markets, Exchange rates, Imports, Inflation, Public sector

Keywords: Exchange rate, Free market, Market, WP

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1991/031
Stock No:

WPIEA0311991
ISBN:

9781451844955
ISSN:

1018-5941

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