Exchange Market Reform, Inflation, and Fiscal Deficits

E. Ucer and Pierre-Richard Agénor

No 1995/078, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the short- and long-run effects of exchange market reform in developing countries. The first part reviews the recent experience of Guyana, India, Jamaica, Kenya, Sierra Leone, and Sri Lanka with exchange market reform. The second part studies analytically the short-run dynamics of the parallel market premium and the money supply upon unification, when the post-reform regime consists of either a pure float or a managed float. The third part discusses the impact of unification on inflation and quasi-fiscal deficits, and identifies a variety of implicit taxes and subsidies that must be taken into account in assessing the longer-run effects of exchange market reform.

Keywords: WP; exchange rate; central bank; exchange market reform; money stock; exchange market intervention; adjustable peg; cambio market; implementation of exchange market reform; parallel exchange rate; paralllel market premium; price volatility; exchange rate system; net effect of exchange market reform; market rate; Exchange rates; Currency markets; Exchange rate arrangements; Multiple currency practices; Sub-Saharan Africa (search for similar items in EconPapers)
Pages: 62
Date: 1995-08-01
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Citations: View citations in EconPapers (4)

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Journal Article: Exchange market reform, inflation, and fiscal deficits (1999)
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