Competitive exchange rates, inflation and monetary policy

Roberto Frenkel

Revista de Economía Política de Buenos Aires, 2008, issue 3-4, 21-32

Abstract: Editorial Review To analyze the sustainability of economic development models based on a “competitive” real exchange rate target is what leads R. Frenkel to reassess some macroeconomic policy dilemmas. Three key issues are stressed. In the first place, the author emphasizes the feasibility of conducting an active monetary policy, through a model that converges to a system of (strong) constraints that determine the “degrees of freedom” of monetary policy under this regime. Secondly, the author sets out the need for understanding the role of aggregate demand policies as offsetting (in an antiinflationary sense) the expansionary effects that exchange rate policy has on employment and economic activity. In this respect, the greater effectiveness of fiscal policy to attain such goal is finally remarked.

Keywords: monetary policy; Competitive exchange rates; inflation (search for similar items in EconPapers)
Date: 2008
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