Exchange Rate Unification Under Non-Credibility: The Haïtian Economy

Kathleen Dorsainvil ()

International Advances in Economic Research, 2006, vol. 12, issue 2, 229-240

Abstract: This paper builds on three strands of literature—Early Warning Systems (EWS), parallel exchange rates, and collapsing exchange rate regimes—by addressing the issue of credibility in the context of unification of the exchange rate in the Haïtian economy. It takes the view that when policymakers are perceived as non-credible, economic agents resort to observation of the economy's performance to assess the imminence of reforms. They then readjust their own behavior, particularly in the area of asset holdings. This paper models the adjustment process using the EWS ratios. Data supports the idea that credibility of the reform mounts over time reaching 85 percent on the eve of the reform. Copyright Springer Science+Business Media, Inc. 2006

Keywords: E58; F31; O54 (search for similar items in EconPapers)
Date: 2006
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DOI: 10.1007/s11294-006-9006-6

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