IMF Staff Papers, Volume 51, No. 3

November 23, 2004

Preview Citation

Format: Chicago

IMF Staff Papers, Volume 51, No. 3, (USA: International Monetary Fund, 2004) accessed November 21, 2024

Summary

This paper tests uncovered interest parity (UIP) using interest rates on longer maturity bonds for the Group of Seven countries. These long-horizon regressions yield much more support for UIP—all of the coefficients on interest differentials are of the correct sign, and almost all are closer to the UIP value of unity than to zero. The paper also analyzes the decision by a government facing electoral uncertainty to implement structural reforms in the presence of fiscal restraints similar to the Stability and Growth Pact.

Subject: Asset prices, Exchange rates, Foreign exchange, Inflation, Labor, Labor unions, Prices, Real exchange rates

Keywords: Asia and Pacific, Asset prices, Central and Eastern Europe, Europe, Exchange rates, Global, Inflation, Inflation expectation, Labor unions, Liberalization episode, Market efficiency, Market performance, Market value, Monetary policy rule, Monopoly trade union, Price level, Real exchange rates, SP, Sub-Saharan Africa, Trade liberalization

Publication Details

Pages:

216
Volume:

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DOI:

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Issue:

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Series:

IMF Staff Papers No. 2004/003
Stock No:

SPIEA2004003
ISBN:

9781589063518
ISSN:

1020-7635

Notes

Issues from 1998 onward are available for free online

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