Title: Real Exchange Rate Targets, Nominal Exchange Rate Policies, and Inflation
Abstract: Thh paper examines the implications of some nominal exchange rate policies aimed or attaining a given real exchange rate target. A policy rule that sets the rate of nominal depreciation as a function of the departures of the real exchange rate from its target level is unable to achieve the target. In contrast, a policv rule that sets the change in the rate of depreciation as a function of those departures may lead the economy to the target, under certain conditions. However, this policy could also lead the economy to a process of accelerating inflation.
Publication Year: 2010
Publication Date: 2010-03-11
Language: en
Type: article
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Cited By Count: 19
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