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Exchange Rates and Monetary Spillovers

Guillaume Plantin () and Hyun Song Shin
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Guillaume Plantin: ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, Tepper School of Business - CMU - Carnegie Mellon University [Pittsburgh]

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Abstract: When does the combination of flexible exchange rates and inflation-targeting monetary policy guarantee insulation from global financial conditions? We examine a dynamic global game model of international investment flows where, for some combination of parameters, the unique equilibrium exhibits the observed empirical feature of prolonged episodes of capital inflows and appreciation of the domestic currency, followed by abrupt reversals where capital outflows go hand-in-hand with currency depreciation, a domestic bond market crash, and inflationary pressure.

Keywords: Currency appreciation; Capital flows; Global games (search for similar items in EconPapers)
Date: 2016-01-01
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03393218
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Related works:
Journal Article: Exchange rates and monetary spillovers (2018) Downloads
Working Paper: Exchange Rates and Monetary Spillovers (2018) Downloads
Working Paper: Exchange Rates and Monetary Spillovers (2018) Downloads
Working Paper: Exchange rates and monetary spillovers (2016) Downloads
Working Paper: Exchange Rates and Monetary Spillovers (2016) Downloads
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