Back to Search
Start Over
Monetary Policy Choices in Emerging Market Economies: The Case of High Productivity Growth.
- Source :
- Journal of Money, Credit & Banking (Wiley-Blackwell); Mar2008, Vol. 40 Issue 2/3, p243-271, 29p, 1 Chart, 6 Graphs
- Publication Year :
- 2008
-
Abstract
- We develop a general equilibrium model of an emerging market economy where productivity growth differentials between tradable and non-tradable sectors result in an equilibrium appreciation of the real exchange rate—the so-called Balassa-Samuelson effect. The paper explores the dynamic properties of this economy and the welfare implications of alternative policy rules. We show that the real exchange rate appreciation limits the range of policy rules that, with a given probability, keep inflation and exchange rate within predetermined numerical targets. We also find that the B–S effect raises by an order of magnitude the welfare loss associated with policy rules that prescribe active exchange rate management. [ABSTRACT FROM AUTHOR]
- Subjects :
- MONETARY policy
CAPITALISM
DEVELOPING countries
FOREIGN exchange rates
DUAL economy
Subjects
Details
- Language :
- English
- ISSN :
- 00222879
- Volume :
- 40
- Issue :
- 2/3
- Database :
- Complementary Index
- Journal :
- Journal of Money, Credit & Banking (Wiley-Blackwell)
- Publication Type :
- Academic Journal
- Accession number :
- 31468332
- Full Text :
- https://doi.org/10.1111/j.1538-4616.2008.00112.x