Credibility and adjustment: gold standards versus currency boards
Jean-Baptiste Desquilbet (jean-baptiste.desquilbet@univ-lille.fr) and
Nikolay Nenovsky
William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan
Abstract:
It is often maintained that currency boards (CBs) and gold standards (GSs) are alike in that they are stringent monetary rules, the two basic features of which are high credibility of monetary authorities and the existence of automatic adjustment (non discretionary) mechanism. This article includes a comparative analysis of these two types of regimes both from the perspective of the sources and mechanisms of generating confidence and credibility, and the elements of operation of the automatic adjustment mechanism. Confidence under the GS is endogenously driven, whereas it is exogenously determined under the CB. CB is a much more asymmetric regime than GS (the adjustment is much to the detriment of peripheral countries) although asymmetry is a typical feature of any monetary regime. The lack of credibility is typical for peripheral countries and cannot be overcome completely even by “hard” monetary regimes.
Keywords: monetary regime; gold standards; and currency boards (search for similar items in EconPapers)
JEL-codes: E42 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2004-05-01
New Economics Papers: this item is included in nep-mac and nep-tra
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Citations: View citations in EconPapers (6)
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Working Paper: Credibility and Adjustment: Gold Standards versus Currency Boards (2004)
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