Transitional Exchange Rate Policy in a Low Per Capita Income Country

Ashima Goyal

Working Papers from Indira Gandhi Institute of Development Research-

Abstract: In our intertemporal optimizing model the equilibrium real exchange rate is determined by a sustainable balancing of the current and capital accounts of the balance of payments. Under perfect global capital mobility and managed exchange rate, a rise in expected depreciation of the exchange rate is associated with a fall in money balances. A real wage target translates into a real exchange rate target, that conflicts with the exchange rate required for the intertemporal balance of payments equilibrium.

Keywords: EXCHANGE; RATE (search for similar items in EconPapers)
JEL-codes: F31 (search for similar items in EconPapers)
Pages: 30 pages
Date: 1998
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Journal Article: TRANSITIONAL EXCHANGE RATE POLICY IN A LOW PER CAPITA INCOME COUNTRY (2006)
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