Limit search to available items
Book Cover
E-book
Author Iyer, Tara, author

Title Exchange Rate Choices with Inflexible Markets and Costly Price Adjustments. Tara Iyer
Published [Washington, D.C.] : International Monetary Fund, [2017]
©2017

Copies

Description 1 online resource (29 pages)
Series IMF Working Paper ; WP/17/154
IMF working paper ; WP/17/154.
Contents Cover; Contents; 1. Introduction; 2. Stylized Facts; 3. A Small Open Commodity-Exporting Economy; 3.1. Households; 3.2. Relative Prices; 3.3. Firms; 3.3.1. Commodity Sector; 3.3.2. Non-Commodity Sector; 3.4. Central Bank; 3.5. Market-Clearing and Accounting; 3.5.1. Goods, Labor, National Accounts; 3.5.2. Assets; 3.6. Equilibrium; 4. Calibration; 5. Exchange Rate Choices in Inflexible Markets; 5.1. Dynamics under Alternate Exchange Rate Regimes; 5.2. Labor Market Rigidity; 5.3. Product Market Rigidity; 5.4. Welfare; 5.5. Robustness; 6. Conclusion; References; Figures
Summary This paper analyzes the appropriate choice of an exchange rate regime in agricultural commodity-exporting economies. In an open economy model that incorporates key structural characteristics of agricultural commodity exporters including dual labor markets, the benefits of exchange rate flexibility are shown to depend on the extent of labor and product market development. With developed markets, flexible exchange rates are preferred as they allow for greater relative price fluctuations, which amplify the transmission mechanism of labor reallocation upon commodity price volatility. When labor and product markets are not welldeveloped, however, international relative price adjustments exacerbate currency and factor misalignments. A nominal exchange rate peg, by mitigating relative wage and price fluctuations, increases welfare relative to a float. Given the current low level of labor and product market development across most agricultural commodity exporters, the study provides a counterpoint to conventional arguments in favor of flexible exchange rates and a rationale as to why exchange rate targeting is appropriate in agricultural economies
Notes "June 2017."
Print version record
Subject Foreign exchange rates.
Commerce.
Money -- Tables.
Money
Foreign exchange rates
Commerce
Commodity Exporters.
All Countries.
Agriculture in International Trade.
Agricultural Exports.
Agricultural Commodities.
Genre/Form Tables
Form Electronic book
ISBN 1484305981
9781484305980
1484308956
9781484308950