Exchange Rate Policy and Monetary Strategy Options in the Philippines: The Search for Stability and Sustainability

Aerdt Houben

No 1997/004, IMF Policy Discussion Papers from International Monetary Fund

Abstract: This paper evaluates the Philippines’ experience with different exchange regimes since 1970. It argues that the shift to a flexible regime was crucial to restoring external viability and generating an export-led economic take-off, but that mixed performance in meeting money targets and asymmetric policy reactions to exchange rate pressures have resulted in an uneven inflation performance. Since adoption of a firm nominal anchor for monetary policy would contribute to a more effective control of inflation and thereby to better prospects for sustained growth, the merits of three monetary strategy options are reviewed: stricter adherence to a money supply rule, adoption of an exchange rate peg, and a switch to direct inflation targeting.

Keywords: PDP; Policy vis-a-vis; U.S. dollar; exchange rate anchor; exchange rate rigidity; stability vis-a-vis; nominal exchange rate; exchange rate commitment; monetary policy independence; capital goods; intervention policy; policy mix; Exchange rates; Exchange rate policy; Inflation; Monetary base; Inflation targeting; Global (search for similar items in EconPapers)
Pages: 36
Date: 1997-05-01
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Citations: View citations in EconPapers (4)

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