Exchange-Rate-Based Stabilization: A Critical Look at the Stylized Facts

October 1, 1999

Preview Citation

Format: Chicago

A. J Hamann Exchange-Rate-Based Stabilization: A Critical Look at the Stylized Facts, (USA: International Monetary Fund, 1999) accessed December 22, 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

Do exchange-rate-based stabilizations generate distinctive economic dynamics? To address this question, this paper identifies stabilization episodes using criteria that differ from those in previous empirical studies of exchange-rate-based stabilizations. We find that, while some differences can be detected between exchange-rate-based stabilizations and stabilizations where the exchange rate is not the anchor, the behavior of important variables does not appear to differ—especially output growth, which is good in both cases. There is also no evidence that fiscal discipline is enhanced by adopting an exchange-rate anchor, or that there are any systematic differences in the success records of stabilizations that use the exchange rate as a nominal anchor and those that do not.

Subject: Balance of payments, Current account balance, Exchange rate anchor, Exchange rates, Foreign exchange, Inflation, Monetary policy, Prices, Real exchange rates

Keywords: Africa, Current account balance, ERBS, ERBS literature, ERBS syndrome, Exchange rate, Exchange rate anchor, Exchange rates, Exchange-rate-based stabilization, Inflation, Inflation stabilization, Inflation stabilization strategy, Real exchange rates, Stabilization episode, Stabilization program, Sub-Saharan Africa, WP

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1999/132
Stock No:

WPIEA1321999
ISBN:

9781451855364
ISSN:

1018-5941

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