Resource title

Are exchange rate-based stabilisations expansionary? Theoretical considerations and the Brazilian case.

Resource image

image for OpenScout resource :: Are exchange rate-based stabilisations expansionary? Theoretical considerations and the Brazilian case.

Resource description

High inflation economies, especially the Latin American cases like Argentina and Brazil, have ultimately been successful in stabilising their prices using the exchange rate as a nominal anchor. Contrary to conventional wisdom inflation in these cases has not been reduced at the cost of temporary recessions, instead, they have shown positive output effects. Various theoretical explanations of such boom-cycles are discussed and a model generating such an outcome is developed. Some empirical evidence is given by the Brazilian "Real Plan" of 1994. Nevertheless, the medium and long-term effects of such programmes can result in recessions and a resumption of high inflation, although the cases show that such "postponed stabilisation costs" can be overcome by adequate and flexible supply-side policies accompanying the stabilisation programme. (author's abstract) ; Series: Department of Economics Working Paper Series

Resource author

Gert D. Wehinger

Resource publisher

Resource publish date

Resource language

en

Resource content type

application/pdf

Resource resource URL

http://epub.wu.ac.at/1744/1/document.pdf

Resource license

Adapt according to the license agreement. Always reference the original source and author.