On Credible Disinflation
| Author | : Mr.Jorge Roldos |
| Publisher | : International Monetary Fund |
| Total Pages | : 26 |
| Release | : 1993-11-01 |
| ISBN-10 | : 9781451851342 |
| ISBN-13 | : 1451851340 |
| Rating | : 4/5 (340 Downloads) |
Download or read book On Credible Disinflation written by Mr.Jorge Roldos and published by International Monetary Fund. This book was released on 1993-11-01 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the effects of a credible, gradual exchange rate based disinflation program in a two sector economy. After an initial real exchange rate depreciation, the reductions in the rate of devaluation reduce the monetary wedge generated by a cash in advance constraint, leading to a gradual increase in absorption that yields progressive real exchange rate appreciations and current account deficits. An initial boom in economic activity is not followed by a later contraction, as labor supply expands during the whole length of the program.
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