 EXCHANGE RATE POLICYJoshua E Greene Chapter 9 in Macroeconomic Analysis and Policy:A Systematic Approach, 2018, pp 169-182 from World Scientific Publishing Co. Pte. Ltd. Abstract: Exchange rate policy involves two elements: establishing an exchange rate regime and setting the exchange rate. The exchange rate regime determines how the exchange rate for an economy’s currency is determined. The exchange rate itself can be determined by the economy’s authorities or, in the case of a freely-floating rate, the market for foreign exchange. Although a country’s authorities can, for extended periods, determine the level of the exchange rate, over time it is hard for the exchange rate to deviate significantly from the level that would clear the market for foreign exchange without the development of a parallel exchange market — an unofficial or “black” market where the rate reflects a market clearing level. In addition, certain regimes are often linked to the economy’s choice of a monetary policy framework. For example, countries adopting inflation targeting without capital controls generally adopt a floating rate regime, to allow an independent monetary policy while minimizing the risk of a speculative attack on the exchange rate. Keywords: Macroeconomics; Macroeconomic Data; Macroeconomic Policy; Macroeconomic Objectives; Macroeconomic Accounts; Macroeconomic and Structural Policies (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:wsi:wschap:9789813223837_0009 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in World Scientific Book Chapters from World Scientific Publishing Co. Pte. Ltd. |
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