Capital controls, exchange rate regime and monetary policy independence in India

2012 ◽  
Vol 5 (3) ◽  
pp. 212 ◽  
Author(s):  
Amit Ghosh ◽  
Ramya Ghosh
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Exchange Rate Regime ◽  
Capital Controls

scholarly journals Notes on the Brazilian Crisis of 1997-99

2003 ◽  
Vol 23 (3) ◽  
pp. 376-404
Author(s):  
FRANCISCO L. LOPES
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Exchange Rate Regime ◽  
Capital Controls ◽  
Critical Issue ◽  
Exchange Rate Policy ◽  
The Real ◽  
Diagonal Band ◽  
Rate Policy ◽  
The Exchange Rate

ABSTRACT This paper deals with the Brazilian crisis of 1997-98 that lead to the exchange rate floating of January 1999. It starts by showing how exchange rate policy evolved since the Real Plan of 1994 and how the exchange rate regime became a critical issue when the crisis started in 1997. It discusses monetary policy during the crisis, the IMF program, the endogenous diagonal band and the decision to float as an alternative to capital controls and default. This five-year drama ended surprisingly well with a benign float, but it is useful to know its details, with the usual mix of economic de- bate, personality clashes and historical fatality.

Impact of external currency exposures on macroeconomic policies

2020 ◽  
pp. 23-40
Author(s):  
I. V. Prilepskiy
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Positive Impact ◽  
Exchange Rate Regime ◽  
Macroeconomic Policies ◽  
Panel Regressions ◽  
Financial Account ◽  
Currency Exposure ◽  
Cross Country ◽  
The Impact

Based on cross-country panel regressions, the paper analyzes the impact of external currency exposures on monetary policy, exchange rate regime and capital controls. It is determined that positive net external position (which, e.g., is the case for Russia) is associated with a higher degree of monetary policy autonomy, i.e. the national key interest rate is less responsive to Fed/ECB policy and exchange rate fluctuations. Therefore, the risks of cross-country synchronization of financial cycles are reduced, while central banks are able to place a larger emphasis on their price stability mandates. Significant positive impact of net external currency exposure on exchange rate flexibility and financial account liberalization is only found in the context of static models. This is probably due to the two-way links between incentives for external assets/liabilities accumulation and these macroeconomic policy tools.

Monetary and Exchange Rate Policy in Fragile States

2021 ◽  
pp. 367-405
Author(s):  
Christopher Adam ◽  
James Wilson
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Exchange Rate Regime ◽  
Balance Of Power ◽  
Exchange Rate Policy ◽  
Fragile States ◽  
Policy Choices ◽  
Structural Fragility ◽  
Rate Policy ◽  
Proximate Causes

This chapter charts monetary and exchange rate policy aspects of countries’ descent into, and exit from, economic fragility and draws out some key normative policy lessons for fragile countries and their external partners. Choices around exchange rate regime and the conduct of monetary policy in fragile states will rarely be fundamental drivers of deep structural fragility, even though they may present as proximate causes. Nor are they likely to be decisive in driving the recovery from extreme fragility. However, monetary and exchange rate policy choices can and do play an important role in affecting movements into fragility as well as shaping potential exit paths. Moreover, choices in these domains affect the likely distribution of rents, including those generated by policy distortions themselves. In doing so, they alter the balance of power and can decisively shift the points of influence for policy, including by outside agents.

Capital Control and Monetary Policy in Asian Emerging Market Economies

2018 ◽  
Vol 17 (2) ◽  
pp. 111-134
Author(s):  
Yongseung Jung ◽  
Soyoung Kim ◽  
Doo Yong Yang
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Labor Market ◽  
Foreign Exchange ◽  
Exchange Rate Regime ◽  
Emerging Market ◽  
Elasticity Of Substitution ◽  
Price Stability ◽  
Emerging Market Economies ◽  
Capital Control

This paper explores two policy options in emerging market economies (EMEs) to cope with volatile capital flows due to external monetary policy shocks; capital control policy and choice of exchange rate regime. Both tools reinforce each other when a foreign exchange risk premium shock hits the economy. A contractionary U.S. monetary policy shock has significant real effects in EMEs. Conventional wisdom tells us that a free floating exchange rate with inflation targeting is better when a country faces foreign shocks. However, we show that a flexible exchange rate with less capital controls is not the best option in EMEs based on vector autoregression analysis. Moreover, we set up a small open economy new Keynesian model with real wage and price rigidities. It shows that the small economy with labor market frictions is more vulnerable to exogenous shocks such as a foreign exchange rate shock under a fixed exchange rate regime than under a flexible exchange regime. We show that maintaining price stability is not desirable when there are substantial frictions in the labor market and the intratemporal elasticity of substitution is high. Finally, the model shows that the welfare cost difference between a policy of maintaining purchasing power and a policy aimed at price stability reverses as the intratemporal elasticity of substitution between home and foreign goods increases.

Monetary Policy in the Conditions of Influence of Negative Factors of the World Economy

2019 ◽  
Vol 7 (1) ◽  
pp. 8-13 ◽  
Author(s):  
Ольга Николайчук ◽  
Olga Nikolaychuk ◽  
Д. Кадырова ◽  
D. Kadyrova
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
World Economy ◽  
Exchange Rate Regime ◽  
Global Market ◽  
Energy Prices ◽  
Consumer Prices ◽  
The World ◽  
The Impact ◽  
Negative Factors

The article analyzes the monetary policy in the context of exogenous shocks of the external sector. The Bank of Russia and Rosstat use official statistics for 2000–2018. The parameters of the action of negative factors of the world economy apply the conditions of world trade and changes in the exchange rate of national currencies. The graphic form analyzes the susceptibility of macroeconomic indicators to changes in the external market and their dependence on fluctuations in energy prices. The influence of consumer prices and inflation on the monetary policy of the Central Bank is considered. The analysis allows us to conclude about the relationship of the effect of events from processes in the global market. It was concluded that, despite these risks, there are optimal ways of conducting monetary policy, which remain the targeting of inflation and the effect of the floating exchange rate regime of the national currency. For effective results in reducing the dependence of macroeconomic processes on the impact of external shocks, coordinated activities of all branches of economic power, and their effective macro-prudential and fiscal policies are important.

scholarly journals Mexico’s Monetary Policy Framework Under a Floating Exchange Rate Regime

1999 ◽  
Author(s):  
Agustín G. Carstens ◽  
Alejandro M. Werner
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Exchange Rate Regime ◽  
Emerging Market ◽  
European Monetary System ◽  
Flexible Exchange Rate ◽  
Interesting Case ◽  
Policy Framework ◽  
Floating Exchange Rate ◽  
Monetary Policy Framework

The currency and financial crises experienced by the European Monetary System in 1992, by Mexico in 1994-95 and the recent emerging market crisis of 1997-1999 have reignited the debate on the viable exchange rate regimes for small open economies and, in particular, for emerging markets. After more than four years with the floating exchange rate regime, the Mexican experience provides an interesting case of study for other emerging economies considering the possibility of moving towards a more flexible exchange rate regime. In this paper we provide an overview of the transition towards the floating exchange rate regime, the functioning of this system in Mexico, the current monetary policy framework and the behavior of the economy in recent years.

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