Living with flexible exchange rates

Corrinne Ho and Robert McCauley

International Finance from University Library of Munich, Germany

Abstract: This overview paper examines two main issues. The first is why the exchange rate matters, especially for emerging market economies. The second is under what circumstances and how countries have dealt with the challenges posed by the exchange rate in recent years in the context of inflation targeting. We find that emerging market economies, being more exposed to the influence of the exchange rate, are likely to accord the exchange rate a bigger role in policy assessment and decision-making. However, even with the greater emphasis on the exchange rate, the emerging market economies under review have not acted in contradiction to their announced inflation targets. Furthermore, recent experience shows that having to keep an eye on the exchange rate is also a fact of life in industrial economies, inflation targeting or not.

Keywords: inflation; targeting; emerging; markets; exchange; rate (search for similar items in EconPapers)
JEL-codes: F3 F4 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2004-11-06
New Economics Papers: this item is included in nep-ifn
Note: Type of Document - pdf; pages: 55
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Citations: View citations in EconPapers (42)

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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpif:0411003

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